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The first multilevel property planned for Christchurch's central-city red zone since the earthquakes is in doubt because of insurance problems.
Rob McCormack, owner of several Harcourts real-estate franchises in the city, is ready to build a new headquarters on the site of the "Grenadier Castle", his five-storey flagship building demolished after the June earthquake. But his longtime insurer, QBE, and Vero do not want to offer cover for the rebuild and Mr McCormack said a quote from Lloyds was many times the normal cost.
"Everyone is talking about a Christchurch rebuild. I was going to get [Canterbury Earthquake Recovery Authority head] Roger Sutton to meet me on the site and hammer in the first surveyor's stake, but here's my dilemma: I don't have insurance.
"I'm the first with a building consent, with a pile consent and with a building contract for a multi-level building in the red zone all ready to go, Mr McCormack said.
"I have spent $678,000 to this point. The build is $6 million to $7 million. I have money set aside for the rebuild ... and I may have to pull the plug."
A decision was likely next week.
Mr McCormack said it seemed insurers were fleeing from risk and he was worried about the consequences. Although he could go with Lloyds, "that cost is huge" and he would still need to find an insurer for the completed building.
"I don't want others to spend a lot of money on compliance to find they can't do the job."
Since the February earthquake, the Christchurch City Council has granted 85 building consents for the inner city. It is not known how many have secured insurance.
Canterbury Master Builders Association president Richard Field said getting insurance for building in many parts of the city was a "huge problem".
"We have got it with lots of clients. We have a building that we tendered for that is not going ahead because they can't get insurance."
Banks won't lend without insurance and it was causing a drag on the recovery.
"More than a year has gone by [since the September quake] and we are no further ahead," Mr Field said. "There is no boom here yet."
Builders were getting by on Earthquake Commission work and readying temporary business premises but that was tapering off, and the message to be patient was wearing thin, he said.
The good news was the EQC payments and the Government buyout of 7000 properties deemed uninhabitable, which had stimulated the property market. "That was a Godsend."
Earthquake Recovery Minister Gerry Brownlee said an insurance bottleneck was an issue but was "progressively sorting itself out".
Insurers were coming back into the city's rural fringe and large building companies had bulk insurance and were offering house, land and insurance deals at reasonable prices.
His office had put in "a huge amount of effort" to ensure the industry understood the new higher building code in place and had the latest seismic information, which indicated earthquake risk was lessening in line with expectations.
Mary Comerio, a professor at the University of California in Berkley who studies post-disaster recovery, said Christchurch might be experiencing something of an insurance backlash because of the many uncertainties associated with the rebuilding effort.