Week in Review
The money behind big Queenstown development
Development’s mortgage came from a reclusive Kiwi businessman and a wealthy Indonesian. David Williams reports
Details of a Queenstown development’s multi-million dollar mortgage can be revealed.
Last month, Treespace Queenstown Ltd was granted consent to build a 20-bed lodge, 53 cabins and chalets, and an amenities building at Mt Dewar Station, about seven kilometres from Queenstown.
The centrepiece of the development is ecological planting and increased public access to the former Crown-owned property.
Property records show a mortgage security of $13.5 million to Mount Dewar Limited, owned by IT industry veteran John Clough, and Indonesia’s David Salman.
Treespace founder Adam Smith tells Newsroom the mortgage is in place to secure a “residual loan” negotiated prior to Mt Dewar’s purchase. The loan – which is smaller than the security amount, Smith says – will be “cleared in due course”, he says. “As you will be aware, with real estate holdings, mortgages are fairly typical instruments to use.”
Smith says the property loan is not being used to fund the Treespace project. He and another Queenstown-based person, who he wouldn't name, are the investors in Treespace. “The people you have mentioned in your email are not investors in Treespace and are not involved with the Treespace project at Mt Dewar.”
Salman reportedly owns several New Zealand properties, and was behind the exclusive Closeburn Station subdivision with Queenstown’s David Broomfield. Broomfield unsuccessfully tried to develop Mt Dewar through his company Mount Field Ltd. An Environment Court judge threw out its case in 2012, saying the proposed subdivision was inappropriate.
(Council-appointed commissioners who gave the green light to Treespace said the Mount Field proposal had some similarities to the latest subdivision, but there were big differences – including benefits from the ecological restoration, and significant biodiversity gains.)
Broomfield’s company Hendfield Holdings, is a former shareholder of Mount Dewar Ltd.
Smith has told Newsroom he hasn’t dealt with Broomfield, who is probably best known for developing Quail Rise, near the Shotover River. In February, Smith said: “To the best of our knowledge he was disassociated legally and otherwise with the property several years ago and has had no involvement with our application and no involvement with Treespace or the Treespace concept.”
According to the magazine Indonesia Tatler, earlier this year Salman threw a lavish birthday party at the luxurious Pera Palace Hotel in Istanbul, Turkey. Guests included Dewi Sukarno, the former wife of Indonesia’s founding president Sukarno.
Successful and reclusive
Clough, a Kiwi, is an IT industry veteran who spent much of his business career in Hong Kong. He owns two Queenstown properties a stone’s throw from Lake Wakatipu, both with rateable values of more than $2 million. He also owns a palatial Hamilton home.
Clough’s fortunes changed in 1999 when an Australian company acquired Commercial Software Services Ltd, a software distributor and hardware reseller the Kiwi had co-founded in 1983. (One of Clough’s current investments is in Christchurch-based encrypted healthcare messaging company Celo.)
International company boards he has served on include CDC Corporation, Praxa, and, Corgi International.
CDC was the first Chinese internet company to list on the Nasdaq. It filed for bankruptcy in 2011 after losing a litigation battle. In the fallout, CEO Peter Yip and Clough, who was chairman, were pressured to step down.
An Overseas Investment Office decision from 2005 shows Clough became involved in the New Zealand thoroughbred horse breeding and racing industry through Yip and wife Nicola Chu. Clough is still a director of Bauhinia Farm Ltd, a Chu-owned company.
Not much has been written about Clough in recent years, but he was caught up in a bizarre bankruptcy case in 2010. According to a NZ Herald story, he co-owned a Hamilton house with psychiatrist Dr Alan Simpson, who was bankrupted in England as an underwriter of insurer Lloyd’s of London. International agreements were used to search the Hamilton house, which eventually yielded $2.3 million of gold and silver from hidden safes, a secret compartment, a filing cabinet and a bathroom vanity.
In 2014, Clough was involved in a legal stoush with his Queenstown neighbour, Australian Marina Brun-Smits, over allegations that it is a leaky home, and the businessman and a building company were legally responsible for water damage.
Two appeals lodged
The Environment Court confirms two appeals have been lodged against the Treespace decision: one from neighbouring developers Chris and Elisabet Streat, and the other from nearby resident Clive Manners-Wood.
Both appeals are somewhat limited – the Streats are self-confessed trade competitors who seek the removal of six nearby lots, while Manners-Wood wants iron-clad assurances over the water supply to his property, which has a lavender oil distillery and farm shop.
Manners-Wood says: “Our water is everything. If we don’t have water then we’ve had it down here. But we never expected, obviously, that the high country would be turned into a housing lot.”
The Streats live about 100m from the southern boundary of Mt Dewar. Reached by phone, Elisabet Streat declined to comment. The couple’s notice of appeal says Treespace’s subdivision – which, they say, is inappropriate within an outstanding natural landscape – will detract from their amenity values. Other concerns include inappropriately steep roads, and that the large-scale planting of beech trees, they say, won’t adequately offset the visual effects.
The Greenslade family used to own Mt Dewar. They were involved in the Environment Court appeal in 2012 which blocked Mt Field’s plans to build a lodge, 14 houses, and access roads on the farm station.
Speaking on the family’s behalf, Liz Greenslade, who still has a house in Queenstown, says it was perplexed as to why the Environment Court decision and recommendations were so “roughly overridden and derided” – especially when the council’s planner recommended rejecting the subdivision.
However, the family decided against appealing. She estimated an Environment Court appeal would have cost about $130,000 – for legal costs, and landscape and planning experts. “At the end of the day, there doesn’t seem like there is a whole lot of support.”
Arthurs Point Outstanding Natural Landscape Society member Matt Semple says it’s worried about the decision setting a precedent for development (something commissioners thought would be improbable). However, it, too, was put off appealing by the cost, considering the society is already involved in a costly legal battle with a developer and the local council.
“There are a whole bunch of things that would have actually been right up the alley of the landscape society to appeal, but the members of the society thought we’ve already got a couple of battles on our hands, and we want to stay focused because we’re committed to those.”
Semple says there needs to be somewhat of a barrier for appeals, otherwise “everyone could appeal everything”. But the costs quickly rack up.
“Having change out of $100,000, you’d be doing well. How’s a society that’s funded by mums and dads meant to come up with this kind of money? I don’t know.”
Treespace’s plan is controversial, but it actually gained more submissions in support (56), than it did against (36).
Kris Vermeir, the owner of Browns Ski Shop, wrote in his submission that the subdivision would enhance the whole area. “It is a new way of thinking,” he said, noting that restoring the native flora and fauna would be commercially viable. (He added that he did have reservations about the council’s ability to follow through and ensure Treespace does everything it says it’ll do.)
In his submission, Trent Yeo, an entrepreneur who started tourism business ZipTrek, said he loved the bold plan. Congratulations to the directors of Treespace for the vision and creativity that is required to come up with a solution that addreses some of our largest systematic challenges whilst being viable with a world view which focuses basically on economics.” As an Australian, Yeo wanted commissioners to ensure fire risk and refuge, and water tanks were considered in detail.
The one neutral submission, from Wakatipu Wilding Conifer Control Group, supported the Mount Dewar plan to clear all wildings and “applauds the restoration through native plantings and access to the mountain through walking and bike trails.
* This story has been changed to correct the loan amount, which is lower than $13.5m, and to clarify that the loan relates to the Mt Dewar property and not the Treespace project.
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