PRESENTATION OF

HAMILTON’S ECONOMY

May 2015

Attachment 1

HAMILTON’S ECONOMY

Hamilton is a growing city. It has reached a scale where it is now a very diverse, confident and strong place to invest in. The following key facts about Hamilton’s economy underpin that Hamilton is a very safe place to do business.

Hamilton’s population currently stands at approximately 154,000 people.

Between 2013 and 2040, the city’s population is projected to grow by almost 40

per cent.

It is New Zealand’s largest inland city.

It is just over 120 kilometres (km) from New Zealand’s largest and fastest growing

city, Auckland.

Hamilton is also 100km from Tauranga, New Zealand’s fastest growing sea port.

Hamilton’s population is youthful, compared to Auckland, Tauranga, Christchurch

and New Zealand as whole. The proportion of Hamilton’s population in the under-

30 age group is projected to decline gradually until 2040, but the rate of decline will

be less than elsewhere in New Zealand.

Houses in Hamilton are, on average, half the price of houses in Auckland. They are

also almost 30 per cent below the national average.

The labour force participation rate in Hamilton is above the national average.

Half the employed workforce in Hamilton is in the ‘Highly Skilled’ and ‘Skilled’

occupations.

Hamilton has a lower proportion of unqualified and lowly qualified people in its

employed workforce than New Zealand as a whole and around the same

proportion of people in these categories as Auckland has.

Conversely, the city has a larger proportion than in New Zealand as whole of people

in its employed workforce who have higher level qualifications (ie, diploma, degree

or post-graduate qualifications).

Hamilton’s gross domestic product (GDP) grew strongly in 2014. It has maintained

steady growth over the longer term. June 2014 GDP growth is 3.4 per cent.

Auckland’s was 2.7 per cent.

Hamilton’s productivity is 2.4 per cent, with GDP per person approximately $84,500

($84.5K).

There are 31,000 people in highly skilled jobs from a total employment population

of 81,500 jobs.

Hamilton’s GDP in the professional, scientific and technical services grew by 6 per

cent each year between 2003 and 2013.

BALANCING THE BOOKS Since 2008, the Council has been spending more than it is earning and borrowing to pay the difference. Three years ago we made a plan to change that and balance the books by 2017. Balancing the books is critical. It means we will be able to pay for new assets and upgrades without the same amount of borrowing.

1. POPULATION GROWTH

Hamilton is a fast growing city; in fact it’s one of New Zealand’s fastest. Hamilton has a population of more than 153,000, with around 60 per cent of people under the age of 40.

In 30 years, Hamilton’s population is predicted to increase by 60,000 people that represents population growth of around 40%.

Hamilton’s median age is lower than New Zealand.

There are approximately two million people in the Auckland-

Hamilton-Tauranga ‘golden triangle’. This is projected to rise to

around three million by 2040.

POPULATION

Under 30 30 and over Under 30 30 and over Under 30 30 and over Under 30 30 and over Under 30 30 and over Under 30 30 and over

2006 48% 52% 44% 56% 38% 62% 41% 59% 42% 58% 45% 55%

2013 47% 53% 43% 57% 37% 63% 39% 61% 40% 60% 44% 56%

2016 47% 53% 43% 57% 38% 62% 38% 62% 40% 60% 44% 56%

2021 46% 54% 41% 59% 37% 63% 37% 63% 39% 61% 43% 57%

2026 45% 55% 39% 61% 36% 64% 36% 64% 37% 63% 41% 59%

2031 44% 56% 38% 62% 35% 65% 35% 65% 36% 64% 40% 60%

2040 43% 57% 36% 64% 33% 67% 33% 67% 35% 65% 36% 64%

Source: Statistics New Zealand, BERL Calculations

Hamilton City Auckland Tauranga City Christchurch City New Zealand Greater Hamilton

2. GROWTH CITY

GROSS DOMESTIC PRODUCT

Hamilton’s approximately $7.2 billion dollar ($7.2B) economy grew by 3.2 per centin the year to December 2014.

Consistently for the last four years the Hamilton economy has continued to grow.

Hamilton generates a greater proportion of its GDP in the professional, scientificand technical services.

MIGRATION

There is continued growth in people migrating to Hamilton.

People are actively choosing to move to Hamilton as a place to live work and enjoy.

Business25%

Construction7%

Health12%

Manufacturing17%

Education5%

Retail/Wholesale21%

Other13%

Source: BERL Regional Database

HOUSE PRICES

Hamilton house prices continue to grow but not at a rate where they are unaffordable.

Both the growth in the number of houses being built and the value of those houses being built show a strong economy, without the overinflated prices of other cities.

SKILLED WORKFORCE

Approximately 50 per cent of the employed workforce is in Hamilton is in the ‘Highly Skilled’ and ‘Skilled’ occupations.

As a proportion of its employed workforce, Hamilton has a larger proportion of workers with post-secondary qualifications.

14 per cent are managers. 24 per cent are professionals. 12 per cent are technicians.

17 per cent of Hamiltonians have a degree or post-degree qualification.

Nearly 40 per cent of Hamiltonian households earn over $70K per annum. Twenty per cent of

Hamiltonians earn over $100K. Sixteen per cent earn over $70K.

HAMILTON’S DIVERSE BUSINESS SECTOR (GDP BY SECTOR)

Hamilton’s diverse economy is represented by the proportion of sectors that make up the GDP of Hamilton.

Nearly 50 per cent of Hamilton’s economy consists of business, construction and manufacturing.

Hamilton’s economy and its diversity show that although it is an important part of the Agricultural (‘Agri’) sector, it has a very diverse economy.

Hamilton has reached a scale where its sophisticated manufacturing and high quality service sector are a significant part of ‘NZ Inc’s’ broader economy.

ROOM FOR GROWTH

Infrastructure development is preparing the city for growth for over 200,000 people. Hamilton has outstanding roads and major routes that connect the economic areas within the city, the Waikato, and to the rest of New Zealand. Hamilton invests in a level of capital expenditure that ensures we have appropriate infrastructure to meet the city’s future growth.

TIMELINE FOR GROWTH

Hamilton has a 30 year Infrastructure Plan. Hamilton is growing and Hamilton City Council is preparing to invest into the assets and infrastructure that is required to ensure that growth isn’t held back.

3. WORK AND LIVING

Hamiltonians are a well-educated and enterprising community. There is continued strong growth in the service sector and ‘high tech’ manufacturing within the city.

Overall, there is a movement towards professional/scientific employment and an increase in inner city living. The movement towards a more professional services economy has also seen the central city’s GDP grow.

What this shows is that Hamilton’s central business district (CBD), like that of Auckland and Wellington, is attracting professional services which are gravitating to the central heart of Hamilton.

BUSINESS/EMPLOYEES Professional (scientific and technical) services have grown - this category now makes up one of the larger groups of employees in the central city (312 employees). There are 18,900 employees within the central city and approximately 70,000 in employment in Hamilton overall. The area where Hamilton’s central city is strongest is professional services and healthcare.

SPECIALISED MANUFACTURING Hamilton manufacturing industries are highly specialised in the following aspects of manufacturing:

Polymer product and rubber products.

Fabricated metal products.

Primary metal and metal products.

Both areas also specialise to a lesser extent in the manufacturing of transport equipment and machinery and equipment. There may also be some vertical integration in the latter industry because both areas also specialise in wholesale machinery and equipment.

LIVING IN THE CITY

Hamilton’s central city is a growing area when it comes to population. Since 2001, 900 more people are now living in the inner city.

The greatest increase was the 20-34 age group. The largest percentage change to the central city by ethnic group (500 people) identifying themselves of Asian descent.

The number of dwellings within the central city also increased by the same rate as

that of residents.

Apartments/townhouses increased from 492 in 2001 to just over 1000 in 2013.

RIVER PLAN

An important amenity for Hamilton is the Waikato River. In 2014 an integrated 30 year plan to provide clarity and certainty regarding the development of the River was developed. It provides a strategic guide for council, developers and business regarding the development of the Waikato River.

http://www.hamiltoncityriverplan.co.nz/

4. THINKING CITY

Hamilton is also an innovative with a strong focus on education, thinking and research.

INNOVATION

Innovation Park is New Zealand’s smartest Agri-science park in New Zealand. It leads the way in the Agri-Innovation space. The New Zealand government is showing a strong commitment to Innovation Park by locating representatives from the Callaghan institute into the park.

Knowledge-driven enterprise has also seen the rise of an aviation cluster, a fast-growing manufacturing industry, a telecommunications hub and the development of an inland port and logistics centre. These are all contributing significantly to the city’s rapid growth and economic health.

BIG DATA, TERTIARY EDUCATION AND RESEARCH

Big Data and a strong analytics industry are located in Hamilton because of the safety that this city can afford those thinking industries. We are safe from volcanoes, earthquakes and tsunamis. Hamilton truly is the city to ‘de-risk’ your Big Data requirements.

Spark, the Earthquake Commission (EQC) and Datacom have large investments through their data centres, call centres and their switching plants.

Waikato University is New Zealand’s leading information-technology (IT) and it has recently been estimated that it’s a $1 billion a year business, contributing to $474

million to New Zealand’s GDP. Wintec, the Waikato’s forward and progressive thinking Polytechnic, is equally as strong in the world of thinking. These institutes, combined with Te Wananga o Aotearoa’s strong academic achievements, mean Hamilton is well equipped with tertiary Institutes.

Approximately 40,000 tertiary students are in Hamilton. Nearly 30 per cent

of Hamiltonians are in some form of tertiary education.

Hamilton also has thriving research based industries with the Ministry of Business, Innovation and Employment (MBIE) recognising the area as having an advantage in Agri, chemicals, minerals and high-tech manufacturing. In addition, our professional, scientific and technical services have experienced the strongest job growth over the last decade at an annual average job growth of four per cent. This is above the New Zealand average.

The National Fieldays and the city’s associated business tourism and events further underpin what a strong and vibrant economy Hamilton has.

AUSTRALASIA’S LARGEST BASE HOSPITAL – 5500 smart thinkers and world leading surgeons

Waikato Hospital (the largest base hospital in the southern hemisphere) has around 5000 employees. A half a billion dollar expansion in 2013 ensures that Hamilton truly is a city with strong investment in the critical service areas such as health. .

5. LOGISTICS CITY

Freight between Hamilton, Auckland and the Bay of Plenty represents over half of New Zealand’s freight movements.

Waikato has the highest per capita central government capital investment in transport and communications, a good quality road transport network, two of the busiest rail lines in New Zealand, a significant airport in Hamilton and many smaller airports in the region.

Approximately 65 per cent of New Zealand's freight is transported between Auckland, Hamilton, and Tauranga. The volume of freight transported between these centres is forecast to double over the next 20 years

INLAND PORT – TAINUI GROUP HOLDINGS

The proposed inland port at Ruakura, which utilises the East Coast Main Trunk Line and the proposed Waikato Expressway, will complement the Fonterra hub, and generate further business investment activity by leveraging Waikato’s central location.

The Ruakura area covers over 800 hectares (ha). Some of the land included in the project is already in use by AgResearch and Waikato Innovation Park.

The initial stages – the inland port and freight logistics hub – will cover 80ha. It is estimated that the proposed hub could create an additional 11,000 jobs for the region and contribute an additional $1 billion in GDP by 2061.

FONTERRA

Fonterra’s Crawford Street stores collect a third of all Fonterra’s ingredients in the Waikato and Bay of Plenty, distributing 33,000 containers of milk powder and

cheese every year. This means the stores receive product 24 hours a day and send shipments to the Port of Tauranga five days a week.

Fonterra Crawford Street was established in 2005 as a dry store. A high-tech cool store with automated stacking robots was added in September 2009 – the largest of its kind in Australasia. During the peak production period, Fonterra Crawford Street’s dry store receives about 10,000 tonnes of product every week and fills more than 100 containers each day. The main export markets for its goods include Venezuela, the Philippines, China, Mexico and Saudi Arabia.

Fonterra Crawford Street is integrated with the Kiwi Rail network, linking up Fonterra’s manufacturing sites

around the central North Island. The site is an important part of Fonterra and Toll NZ’s logistics strategy.

TE RAPA GATEWAY INDUSTRIAL PARK The Te Rapa Gateway Industrial Subdivision in the north of Hamilton is a 122 ha $250 million development.

HAMILTON AIRPORT

Located just to the south of Hamilton is Hamilton Airport and Titanium Park. Titanium Park is a 75ha mixed-use industrial and commercial business park joint venture between Hamilton International Airport and McConnell Property Limited. Located within the greater airport precinct and next to state highways 3 and 21, Titanium Park will house a balanced mix of commercial, industrial, manufacturing and aviation enterprises and provide a range of purchase options catering to businesses of all sizes. Hamilton International Airport (“the airport”) is a key asset for the Waikato Region and is a critical hub in the region’s transport infrastructure. Hamilton International Airport (“the airport”) is a key asset for the Waikato Region and is a critical hub in the region’s transport infrastructure.

The airport is currently the second busiest certificated airport in New Zealand (after Auckland) in terms of total aircraft movements, with two pilot training organisations based on the airport precinct.

In 2013/2014, 294,400 domestic passengers used Hamilton International Airport with Air New Zealand providing daily direct flights to Wellington, Christchurch, Palmerston North and Auckland.

In the last ten years 2.7 million domestic passengers have flown through it. Activities at the airport account for about 870 full time employees. In recent years, the airport has been the subject of a Major Regional Initiatives Project to develop an aviation business cluster by the then Ministry of Economic Development. This cluster is now well-established and includes aircraft design and manufacturing, maintenance and flight training. Air New Zealand operate a maintenance and engineering facility at Hamilton Airport servicing their Beech fleet and some Q300 aircraft.

The airport is strategically located on the corner of a triangle of transport routes (State Highways 3, 21 and 1) connecting Auckland, Hamilton and the Port of Tauranga.

It is also near the western main trunk railway line. This gives it a strategic road access within the ‘golden triangle’ of Hamilton, Auckland and Tauranga, a region

which is a “nationally significant juncture for freight and transport” and a key growth region of New Zealand.

The airport’s central North Island location also means that approximately 52% of New Zealand’s population is within driving distance of the airport.

The airport’s central location also means that it can facilitate travel to the large international tourism attractions in the Central North Island including the Hobbiton Movie Set, Lake Taupo, Rotorua, Waitomo Caves, Raglan and Mount Ruapehu.

Hamilton Airport’s Modern Terminal

Titanium Park (Showing Hamilton’s Airport)

6. ROADING

Hamilton’s population growth and the development of a new expressway between Auckland and Hamilton mean’s Hamilton is poised for continued growth.

THE WAIKATO EXPRESSWAY - ROADS OF NATIONAL SIGNIFICANCE The government is investing $2.1B into a divided four-lane highway between Auckland, Hamilton and Cambridge. The aim is to provide a continuous divided four-lane highway between Auckland and Cambridge that will improve safety and reduce travel times and congestion on State Highway 1. Construction of the Huntly section - the traffic bottleneck between Auckland and Hamilton – commences in September 2015 and will be completed in late 2019.

THE WAIKATO EXPRESSWAY WILL:

reduce travel times between Auckland and Tirau by 35 minutes

significantly reduce the number of fatal and serious injury crashes

increase the highway's capacity and passing opportunities

reduce traffic congestion within smaller communities like Huntly, Ngaruawahia and Cambridge

reduce fuel costs route and contribute to economic growth.

THE HAMILTON SECTION

The Hamilton Section will:

Connect the Ngaruawahia Section of the Waikato Expressway to the existing Tamahere Interchange

Reduce traffic congestion and improve safety on Hamilton’s local road network by significantly reducing the volume of through traffic, including trucks.

BENEFITS OF THE NEW WAIKATO EXPRESSWAY

The Waikato Expressway will improve economic growth and productivity for Auckland, Waikato and the Bay of Plenty through more efficient movement of people and freight. Increased capacity will make the route safer and will move through-traffic away from smaller communities like Huntly, Ngaruawahia and Cambridge. This will reduce congestion in those townships and provide journey time savings to through traffic of up to 35 minutes. The Waikato Expressway will provide route safety and faster travel times for tourists driving between Auckland and popular sites in Waitomo, Taupo, Rotorua and further south.

The Waikato Expressway will:

improve economic growth and productivity for Auckland, Waikato and Bay of Plenty through more efficient movement of people and freight between Auckland, Hamilton, Tauranga and Rotorua

improve the reliability of the transport network through a more robust and safer road between Auckland, Hamilton, Tauranga and Rotorua

reduce travel times between Hamilton and Auckland

support the growth strategy for the central Waikato.

The individual sections of the Waikato Expressway are at the stages described below (as at July 2014):

Pokeno and Mercer sections totalling 22.6km are completed and open.

Longswamp section of 5.9km. Being investigated and designed. Target opening late 2018.

Rangiriri section of 4.4km. Under construction. Opens late 2016.

Ohinewai section of 7.0km is completed and open.

Huntly section of 15.2km. Finalising consenting process, construction due to begin 2015. Target opening 2019.

Ngaruawahia section of 12.3km. Completed and opened December 2013.

Te Rapa section of 7.3km. Completed, opened December 2012.

Hamilton section of 21.8km. Being investigated and designed. Target opening 2019.

Tamahere interchange of 2.4km is complete and open.

Cambridge section of 16km. Under construction. Opens late 2016.

7. STRATEGIC CITY

COORDINATED GROWTH IN THE WAIKATO REGION Looking 20 years out, the Waikato Region has developed an regional approach to economic development called the Waikato Regional Economic Development Strategy. Key aspects of the report are summarised below: In order for the region to realise its potential, collaborative and focused effort is required from businesses, education and research organisations, iwi, local and government agencies and the community.

The strategy will guide regional economic development policy, investment and activities.

Higher standards of living and incomes result from improvements in labour productivity, new investment and the more efficient use of resources.

Regional economic development is the combination of policies, investments and actions. These are designed to improve the ability of people and businesses to more productively and effectively use the resources available in our region and to respond to opportunities.

The region and Hamilton is committed to the goals and objectives of the economic plan.

WAIKATO REGIONAL ECONOMIC DEVELOPMENT GOALS

8. GENERAL STATISTICS

DOMESTIC ACCOMMODATION STATISTICS

These prices are for inner city

Accommodation CBD

Rental 1br 1 1 1 Apartment

Rental 2br Apartment

For sale 3br + 2 bathrooms Apartment

Hamilton

$200- $300 per week

$320-$480 per week

$410K-$700k

(approx)

Auckland

$375 - $700 per week

$450 - $1000+ per week

$415K - $3M+

(approx)

Wellington

$360 - $530 per week

$410 - $1000+ per week

$415K - $3M+

(approx)

DISTANCES

These distances show Hamilton’s central location.

Distances Hamilton CBD to Time to Travel

Hamilton Airport 15 km 20m

Auckland Airport 127 km 1 hr 40m

Auckland CBD and Port

137 km 1hr 50m

New Plymouth 240km 2 hrs 55m

Tauranga Port 105km 1hr 30m

PARKING PRICES IN HAMILTON COMPARED TO AUCKLAND

Car parking prices per day.

CBD Parking Prices Airport Prices

Auckland CBD

$16 a day

$80 a week

$3,840 a year

Auckland Airport

Monthly parking

Taxi fare CBD to airport

$39

$423

$95

Hamilton CBD

$8

$40 a week

$1,920 a year

Hamilton Airport

Monthly parking

Taxi fare CBD to airport

$20

$95 (Maximum)

$45

CBD OFFICE AND RETAIL: RENTAL AND SALE PRICES

CBD Office

100-200sqm CBD Retail 100-200m2

Auckland

Lease per annum

For sale

$26K - $98K

$340K - $600K

Auckland

Lease per annum

For sale

$60K - $129K

$426K - $660K

Hamilton

Lease per annum

For sale

$18K - $55K

$300K – $550K

Hamilton

Lease per annum

For sale

$18K - $40K

$220K - $420K

HAMILTON CHILD-CARE FEES COMPARED

(Note does not include government subsidies.)

Day-care fees

(Approx $)

Infants Toddlers

Auckland CBD Half day $50

Day $85

Weekly $425

$18,700 per annum (44 weeks)

Half day $39

Day $78

Weekly $390

$16,700 per annum (44 weeks)

Hamilton CBD Half day $37

Day $62

Weekly $240

$10,560 per annum (44 wks)

Half day $36

Day $60

Weekly $235

$10,340 per annum (44 wks)

Savings per annum in Hamilton

$8,140 $6,360

CONTACTS

Hamilton City Council Events and Economic Development Group info@hcc.govt.nz

Website: hamilton.govt.nz/our-city/economicdevelopment/Pages/default.aspx

Economic Reports and indicators http://www.hamilton.govt.nz/our-city/economicdevelopment/Pages/default.aspxx