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Privately circulated to commercial investors, vendors, professionals and fi nanciers
NZ Property Investor
Selective consultation keeps public in dark
DEVELOPMENT RESTRICTION
LIFTED
Chris Hutching
An irrigation project backed by rural property owners in the Hurunui District north of Canterbury has lodged resource consents to damn the pristine Hurunui River in two places.
The plans to irrigate 40,000ha have been around for many months and project manager, Amanda Loeffen, issued a media statement a couple of weeks ago launch-ing the “water optimisation project.” But the lodging of the resource consent applications last week prompted a storm of protest in local newspapers from people dis-mayed at the idea of damning the lake-fed river, used by fi shers and recreationists.
This raises the question of how well the Hurunui Water Project is fulfi lling its obligations to publicly consult on the venture.
The Hurunui Water Project has this obligation be-cause it has received considerable taxpayer funds. The
Ministry of Agriculture’s Sustainable Farming Fund al-located $225,000 toward the project in late 2003, and in July 2008 an additional $385,000 was awarded. In ad-dition the project has received support from the district council and Enterprise North Canterbury as well as its shareholders, notably parties associated with Eskhead Station, Ngai Tahu Property, and the region’s lines net-work company, MainPower NZ.
Last year, NZ Property Investor spoke with a man-ager at the Sustainable Farming Fund about the issue of consultation and she said it had been a signifi cant matter in the correspondence between the fund and the irrigation company.
Since that time the Hurunui Water Project has carried out consultation only with selected stakeholder groups and only in the rural areas in the Hurunui District.
However, the Hurunui River is widely used by recre-ationists from nearby Christchurch with its 300,000-odd
Hurunui Water project fi nally going public – to local storm of protest
> Keen interest delays Fiji auction Page 2
> Brothel to make room for Rugby World Cup hotel Page 3
> Bowker outlines $50m philosophy Page 3
> Work starts on $220m housing plan Page 4
> Local body ‘bond bank’ Page 4
> Real estate paperwork put into plain English Page 5
> Crockers eyes Waitakere City potential Page 5
> August agenda Page 5
> Hawke’s Bay investors least dour but investment muted Page 6
> Leases and sales Page 6,7 and 8
> Mortgage research shows tentative signs of Aussie consumer optimism Page 8
EDITORS CHOICE
NZ PROPERTY INVESTOR IS A PUBLICATION OF THE NATIONAL BUSINESS REVIEW
North Shore City Council has opened up its tight restric-tions on property development in the Birkenhead area by investing $19 million to improve the waste water system.
A moratorium was placed on the lower Birkdale catchment in 2006, stopping all development because the council would not allow any added fl ow to the wastewater network due to continuing dry weather over-fl ows in the area.
Approximately 3600 properties were affected.
The investment the council is putting in to a new trunk sewer means the existing 45-year old, 4.5km waste-water main will be replaced.
The project uses new technologies in-cluding underground micro-tunnelling and directional drilling techniques where possible to ensure less disruption to residents, road and park users.
– Jazial Crossley
JULY 27 2009 / ISSUE 28
OIO dealings revealed in fi lesThe decision-making powers of officials in the Overseas Investment Office will be increased under changes being proposed by the National-led government.
Finance Minister Bill English outlined the government’s in-tentions last week but has yet to provide details of actual changes to the Overseas Investment Act.
Announcing the shift, Mr English pointed out that 98% of all applications are ratified anyway, raising questions about why the changes are imperative.
However, the plan is to re-move discretion from govern-ment ministers to decline appli-cations.
A quite different perspective to the debate is expressed by a long time anti-foreign invest-ment group called Campaign Against Foreign Control in Aotearoa.
Although many New Zea-landers disagree with CAFCA’s uncompromising stance, the group has compiled some fas-cinating data about the way the Oversea Investment Office
operates in a long report avail-able at www.converge.org.nz/watchdog/95/8sealo.htm based on files it sought from the of-fice.
This report outlines the issues surrounding the planned sale some years ago (subsequently abandoned) by Brierley to sell a major stake in Sealord fishing group to overseas interests.
The sale was prevented when the then government exercised its discretion.
The report outlines the To page 2
To page 2
> Keen interest delays Fiji auction Page 2
> Brothel to make room for Rugby World Cup hotel
Page 3
> Bowker outlines $50m philosophy Page 3
> Work starts on $220m housing plan Page 4
> Local body ‘bond bank’ examined Page 4
()Real estate watchdog appointees namedBusiness owners join forcesMerlot director bank bankrupted()
> Real estate paperwork put into plain English Page 5
> Crockers eyes Waitakere City potential Page 5
> August agenda Page 5
> Hawke’s Bay investors least dour but investment
muted Page 6
> Leases and sales Page 6,7 and 8> Mortgage research shows tentative signs of Aussie consumer optimism Page 8
Jazial Crossley
The Momi Bay resort in Fiji was sup-posed to go under the hammer at auction last week but it has been delayed by one month because interest has flooded in from around the world.
Real estate agency Bayleys is marketing the resort, and it announced that the sched-uled auction will be postponed until 1.30pm
on Tuesday, August 25.Bayleys managing director John Bayley
said investor interest had come from various international locations, and the extra month was required to give potential bidders time to inspect the property.
While the majority of enquiries were from New Zealand and Australian investors, hope-ful bidders also made contact from Canada, the US, the UK, India, Singapore, Malaysia, Korea, Hong Kong, and the United Arab Emirates.
“We have received about 70-odd calls from interested potential bidders,” Mr Bayley said.
The 107ha resort has 350 residential prop-erties on it, and half finished golf course and hotel.
The resort is now in the hands of mortgag-ee holder Fiji National Provident Fund which hopes to recover just shy of $60 million from the auction.
Bridgecorp investors put $106 million in to the project but PricewaterhouseCoopers receivers have advised them to expect to re-cover only 10c in the dollar.
The August auction will take place at the Natadola Beach Intercontinental Fiji Golf Re-sort and Spa.
Investors keen to sell out of Fiji – but potential investors from around the world are showing interest
Keen interest delays Fiji auction
PUBLISHER’S INFORMATION
EditorDeborah LaHatteDDI: 09 912 2718Email: [email protected]
ReporterJazial CrossleyDDI: 09 912 2762Email: [email protected]
Reporter Chris HutchingPhone: 03 981 1050Email: [email protected]
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AccountsNZ Property Investor is published by Fourth Estate Holdings LtdLevel 14, Citigroup Building23 Customs St EastAuckland, New ZealandPO Box 1734, AucklandPh 09 307 1629, Fax 09 373 3997
ISSN 1175-9909
2 NZ Property Investor
recommendations of OIO officials, which CAF-CA claims amounted to acting as lobbyists for the companies involved.
A more recent example was when the for-mer Labour government prevented the sale of Auckland International Airport to overseas in-terests.
Under the latest changes announced by Mr English, the government delegates more powers to the OIO officials.
“This move alone is expected to reduce the number of ministerial decisions 40%t and cut about two weeks off application assessment times.”
In addition, several types of transactions “of a minor, technical or temporary nature” have been exempted from the act. These include some underwriting transactions and sales within a group of companies with shared ownership.
In the next few weeks the government will undertake the second part of the review, aimed at three main areas of the act. Issues include:
> whether the thresholds determining which land and business investments are screened are set at the right level – so “only genuinely sensitive assets are captured”. > providing greater certainty for investors, by removing the ability to substantially change overseas investment rules during applications. > simplifying the screening of investments in sensitive land, while ensuring that overseas in-vestors are subject to a higher standard than domestic investors.
– Chris Hutching
population. NZPI asked Hurunui Water Project’s
manager Amanda Loeffen why the Hurunui Water Project had never held any public meetings or advertising that would allow the Christchurch public to participate.
She said the Hurunui Water Project had engaged stakeholder groups while acknowledging that the wider public of Christchurch would only have the oppor-tunity via the resource consent process that has now begun.
The Sustainable Farming Fund contract
requires recipients of taxpayer funds to show that such a project is consistent with environmental and cultural values; involve key stakeholders from a community of in-terest wider than the applicant group, early enough for them to influence project de-sign; and produce evidence that a water de-velopment project is an essential element for the socio-economic development of the Hurunui and Waipara areas.
Hurunui Water Project identified as stakeholders – farmers within the potential supply area; 15 landowners with potential storage sites on their land; 36 community organisations in the Hurunui District; two
Ngai Tahu runanga; North Canterbury For-est and Bird; North Canterbury Fish and Game; Ecologic Foundation; Department of Conservation; North Canterbury Feder-ated Farmers; Water Rights Trust; Envi-ronment Canterbury and Hurunui District Council. Several meetings were also held in country halls for the wider community in Hurunui.
Meanwhile, opponents of the scheme are seeking a conservation order. The hear-ing was completed recently and the result is due out this month.
Hurunui Water Project has vowed to ap-peal any order.
From page 2
From page 2
OIO decisions revealed in files
Selective consultation at Hurunui
NZ Property Investor 3
Bowker outlines $50m philosophyChris Hutching
One of the founders of Caniwi Capital Partners, Troy Bowker, con-firms that he has not taken a position as an economic adviser to the prime Minister after being tipped as a front runner last year.
UK expatriate Mr Bowker told NZ Property Investor that he and John Key had talked but he was instead focusing on his plans to build a $50 million commercial property portfolio here (the $50 million is a leveraged figure).
“We’re looking at low risk commercial stuff in places that are important to the tenant. Petone, where we bought The Warehouse is a case in point. It’s between Wellington and Lower Hutt with a good population for retailing. (Caniwi also recently acquired a Mi-tre 10 property on the North Shore, Auckland).
“We’re also taking a very long term view. Two years ago yields were 6-7% while interest rates were over 9%. Now we’ve got the opposite situation and I don’t think they will rise dramatically. It won’t suit the recovery prospects anticipated by Reserve Bank and the Treasury, and they won’t want to encourage a higher cur-rency either.
Since returning to New Zealand in late 2008 with his Canadian
wife he has acted quickly.“On a couple of deals recently we’ve competed with Bob Jones.
We’ve priced competitively and offered short conditional periods of just five days or so.
“We’ve also competed against some of the syndicators in the market. A recent one was the Foodtown in Quay St Auckland where Oyster Bay Group made an offer. The deal is yet to be settled. On a $20 million building the syndicators are offering $2 million to $3 million more. And they’ll fund them through high borrowing.
“The syndicators are offering 9% returns compared with our expectation of 18%. Their returns are eaten up by management fees and commissions. If it was their money (the syndicators) there’s no way they’d be paying some of these prices. They skew the prices in the short term.
“So we don’t want them around. Of course if ever I come to sell my properties I might be happy to see them.”
Mr Bowker is the main funder in Caniwi, along with co founder Matt Fraser. Caniwi is mainly funded by Mr Bowker. They have the support of four or five wealthy investors interested in entering joint ventures with them. They are not planning offers to retail investors, they said.
New Auckland hotels to be built in time for Ruby World Cup
Jazial Crossley
The Shell service station and Famous Flora’s at the corner of Pitt St and Vincent St in the Auckland CBD will soon be no more, making way for a new hotel.
Australian-owned Metro Hospitality will build its first New Zealand property on the site, to be completed in time for the Rugby World Cup.
That’s one of several hotels expected to be built in the next two years to meet tourist demand
It will have 170 rooms, a swimming pool, conference facilities, and a restaurant/bar and will meet the four star standard.
The hotel is being developed by Auckland based Gaowoo.
Hawkins Construction will build the hotel, and Peddle Thorp Architects are designing it.
Metro Hospitality is owned by ASX-listed Transmetro Corporation. It owns multiple ho-tels in Australia, including six in Sydney.
Transmetro chief operating officer George Bedwani said it was the group’s first New Zea-land hotel.
“The company has been contemplating a move across the Tasman for some time and has considered a number of opportunities in Auck-land, Wellington and Christchurch with Auck-
land as the main target,” Mr Bedwani said.“The group is looking to expand in Austra-
lian cities in addition to pursuing other oppor-tunities in New Zealand.”
Iconic brothel Famous Flora’s ceased trad-ing in January after competition from home operations limited the client turnover.
Meanwhile, Tainui Group Holdings has confirmed speculation it will build a new hotel at Auckland International Airport.
An agreement has been announced between the airport and the tribe together with Accor Hospitality for a 263-room, 12-storey Novotel.
Tainui Group Holdings managing director Mike Pohio said the project would go to tender shortly with aim of a completion date of June 2011.
“That will allow Accor the normal commis-sioning period to make sure it is fully function-ing in time for the big wave from the World Cup,” Mr Pohio said.
The 14,000sq m hotel designed by Warren & Mahoney will be next to the airport’s inter-national terminal.
Mr Pohio said the hotel will create jobs and contribute to long term economic growth.
“The hotel will assist Auckland and New Zealand tourism and trade. It will cater for the inevitable economic recovery and growth when it returns.”
It will be Accor’s 30th hotel in New Zea-land.
ICON TO DISAPPEAR: The closed Famous Flora’s brothel and a service station will be replaced by a tourist hotel
TAINUI PLANS: the 263-room hotel will also be built in time for the world cup
Two new developments start an expected rush
4 NZ Property Investor
Local body ‘bond bank’ examinedThe government is working with local body representatives to in-vestigate setting up a “bond bank” to help councils finance up to $30 billion of planned infrastructure over the next decade, Finance Minister Bill English says.
The establishment of the so-called bond bank to reduce councils’ cost of borrowing was one of the Jobs Summit Top Twenty initia-tives. It was also recommended by the Financial Markets Develop-ment Task Force.
A study will look at whether combining councils’ borrowing needs would result in lower interest rates and transaction costs. This arrangement is common overseas. The study will also investi-gate options for how such an organisation could be run.
“The government recognises that councils face a big spike in
costs over the next decade to provide adequate sewerage, water and roads. Some of this will be appropriately financed by debt,” Mr English says.
“We are sympathetic to any arrangement that can lower the cost of local authority borrowing and we are keen to help councils work together to see if they can do this. Any arrangement that comes out of this process will be entirely voluntary.”
A joint government and Local Government New Zealand steer-ing group set up to look at the proposal expects to receive the study in August. Decisions about whether such a vehicle is feasible, and if so how to operate it, will follow.
The study is being conducted by advisers Cameron Partners and Asia-Pacific Risk Management.
Work starts on $220m housing planJazial Crossley
The $220 million Wellington City Council has promised to commit to state housing is being put to good use, with works starting late last week on flats in Newtown.
The Te Ara Hou flats are the first complex of residential state housing to undergo an upgrade as part of the scheme between the council and Government.
Wellington City Council has 40 state housing complexes in its portfolio, all of which it plans to upgrade in the next 20 years.
The $220 million has come from government for the 13 complexes targeted in the first 10 years, with the council promising to fund the second half of the project.
Given priority for refurbishment are those that are in the worst condition, and most in need of earthquake strengthening.
The 67-unit Te Ara Hou complex, built in the late 1970s, is home to 180 people. The up-grade of the flats will account for $50 million of the funding scheme.
Housing Upgrade project director Byron Roff said, “Over the course of the next year, Te Ara Hou will be given a new lease of life, making it a better place to live for all of the tenants.
:They will have warmer, drier units that are better suited for modern living.”
The work on Te Ara Hou includes insula-tion, upgrading the kitchen and bathrooms, carpet, paint and curtains, landscaping of out-door areas. The flats are due to be completed in June 2010.
Six members have been appointed to the Real Estate Agents Authority.
They are: John Auld, a commercial and property lawyer from New Plymouth; Barrie Barnes, JP, of Auckland, who has had a long involvement in the real estate industry; De-nise Bovaird, of Auckland, who has held senior corporate and consultancy risk management roles for the past 12 years, and who was the president of the New Zealand Institute of Chartered Accountants in 2007; Joan Harnett-Kindley, of Wanaka, who is experienced in the operation and administration of real estate businesses; Peter McDermott, of Wellington, who has a background in banking and finance
and formerly held senior positions at BNZ and National Australia Bank; David Russell, of Wel-lington, who played a leading role in the Con-sumers’ Institute and many other consumer rights organisations for more than 35 years.
The Real Estate Agents Act 2008 signifi-cantly reformed the regulation of the real es-tate industry and focused on shifting regula-tory responsibility away from the industry to independent bodies.
The Real Estate Agents Authority will replace the Real Estate Institute of New Zealand as the oversight body for the industry.
The act comes fully into effect on November 17.
Harcourts realtor Eliot Falconer has bought into Team Wellington, which operates three Harcourts offices in Wellington. Mr Falconer, who is already a shareholder in other busi-nesses which operate a further 14 Harcourts offices in the Lower North Island, recently
became a co-owner of Team Wellington Ltd alongside existing shareholders Antonia Brown and Marty Scott.
Team Wellington Ltd operates Harcourts offices in Karori, Kilbirne and central Wellington.
Grant Maxwell Petrie, the other half of failed property investment company Merlot’s directorship, has been adjudicated bankrupt in the High Court at Auckland.
Two months ago, his co-director Stuart Herron was bankrupted.
Merlot Investments and Merlot Homes sold and managed properties in a similar manner to Blue Chip.
And, like Blue Chip, it failed to pay people their guaranteed rental returns.
Merlot Homes has been struck off the Companies Office register following its liquidation, and Merlot Investments is in liquidation and receivership.
Investors paid $1.5 million in deposits, understanding the funds would be held in a trust but this was not the case.
Depositors were then treated as unse-cured creditors and told by the liquidators Waterstone Insolvency they should assume all their funds were lost.
The application for Mr Petrie’s bank-ruptcy was filed by creditor Metecno, which supplies building materials including roof panels.
Mr Petrie currently owns a semi-rural property just back from the ocean in Bay of Plenty’s Rotoiti and has part-ownership of a property in Auckland’s upmarket Orakei Rd.
Real estate watchdog appointees named
Business owners join forces
Merlot director bankrupted
Briefs
NZ Property Investor 5
Crockers eyes Waitakere City potentialCrockers Research focuses on property po-tential in Waitakere City this month where Statistics New Zealand predicts that be-tween 2001 and 2026 the population will grow about 50% from a base of 170,000.
Manukau City and Rodney, by compari-son, are projected to grow more than 60%. Waitakere’s population also has a youth-ful skew with a median age in 2006 being 33 years old (three years below the national figure).
In 2006, 18% of Waitakere households were single person dwellings (vs Manukau City, 14%; Auckland City, 23%).
Nearly 5% of households had more than one family living together (vs Manukau City’s 8% and just 3% nationwide). Single parent families also make up a significant proportion of households in Waitakere; 12% (well behind Manukau on 18%, but ahead of Auckland City on 7).
How does Waitakere rate as a property investment opportunity?
At first glance Waitakere may not appear to offer huge opportunities. But on the posi-
tive side, only 19% of Waitakere’s rental stock was provided by central government, compared with 24% in Auckland City and 35% in Manukau.
Property prices also tend to be less vol-atile. Residential sales figures show that Waitakere experienced a slower median price rise over the few years to the 2007 peak, and has experienced a shallower de-cline since.
Rental levels rose just 14% from 2003 to 2008 in Waitakere City, ahead of Auckland City’s 11% but well behind figures of up to 24% recorded in other parts of the city.
Waitakere fares well from a tenant per-spective, with rental levels at the relatively low end compared to sales prices.
On average, the median price in Waitak-ere for 2008 equated to around 27 years av-erage rent, compared to 21 years in 2003.
In contrast, Auckland City sales prices are higher, but even higher rental levels mean that it takes around 21 years rental to buy the median house, compared to the 19 years it took in 2003.
Real estate paperwork put into plain English
Jazial Crossley
Newly designed real estate documents have been created by the Real Estate Institute to simplify the forms involved in the house sale process.
But chief executive Christine le Cren said while the forms are simplified, they are not dumbed down to the point of losing either their legal standing or meaning.
“We realise there will always be some tension between the relative safety of us-ing precedent documents and terminology, and their plain English equivalents,” Mrs Le Cren said. “However...the expectation is actually quite the opposite.”
A lawyer who presented a paper at the 2008 international Plain English conference Clarity said there are no recorded instances of plain English contracts causing a legal dispute due to the phrasing.
The Real Estate Institute documents were given extensive readings by members of the legal sector.
Executive members of the Property Law Section of the New Zealand Law Society reviewed and commented on the drafts, and Hamilton lawyer Barry Gunson gave his seal of approval.
“The overriding consideration has been to make sure they are legally sound and suitable for the current real estate environ-ment,” Mr Gunson said.
Wellington-based plain English special-ists Write Limited re-wrote the forms, with fifty drafts to perfect them.
“[They] are designed to do away with ambiguity and complexity,” Mrs Le Cren said.
“People who are buying or selling a property have a right to understand the im-plications of what they are signing.”
The forms were designed and laid out by Optimal Usability, with bold headings and open text taking the place of small print for a clearer reading experience.
“We believe the forms will be over-whelmingly popular with the public who need to have absolute confidence when making an important life decision,” Mrs Le Cren said.
August agenda
Interesting resort tender: August 5: A 1.06ha Waiwera, Auckland site with resource consents for spa and accom-modation and another site currently used as a holiday park. Bayleys
Three top conferences:August 12-13: NZ Council for Infrastructure Development Building Nations Sympo-sium 2009 brings together the nation’s deci-sion makers and industry leaders to discuss the way ahead for infrastructure develop-ment in New Zealand. Attendees will include infrastructure constructors and developers, asset owners and operators, major users, service providers, financial intermediaries and investors, Te Papa, Tongarewa, www.vision6.com.au/ch/1xp4nz1/760189/52405dpg2.html>
August 14-16: NZ Property Investors’ Federation conference, Buck the trend, Alexandra Park, AucklandTop speakers include long-time investor Olly Newland; financial consultant Martin Hawes; US psychologist Dr Fred Grosse; investor and mayor John Banks, Housing Minister Phil Heatley; Auckland apartment specialist mar-tin Dunn, banker Craig Moffatt; investor Liz Harris; accountant and investor mark Withers; investor David Whitburn.www.propertyconference.org.nz
August 31- September 1: 13th Annual Com-mercial Leasing & Property Management conference Crown Plaza Auckland, New strategies for a new market situationOver the past year, commercial leasing space has undergone an enormous transforma-tion. Before it was a landlord’s market, and commercial real estate for lease was scarce, particularly in the main centres. Now it is truly a tenant’s market – and the rules of the game have changed fast! Speakers include Alan McMahon, director Research and consulting, Colliers International on the falling Auckland market; Peter Mence, general manager, ING Property Trust on lease negotiations and rent reviews in a falling market; John Church, national director – leasing, Jones lang LaSalle on how to avoid the risks of vacancy and how to market surplus space; a tenants’ panel.
Coming up:Building consents, June, Wednesday July 29Reserve Bank, official cash rate, Thursday July 30Goodman Property Trust, annual meeting, Wednesday August 5 Accommodation survey for June, August 12Retail trade survey: June 2009 quarter, August 14ING Property Trust, annual meeting, Mon-day August 24 Building consents for July, August 28
Making documents easier to understand
6 NZ Property Investor
Chris Hutching
A recent Colliers International survey of com-mercial property confidence showed levels in Hawke’s Bay were third equal highest, with Palmerston North at minus 18% with Bay of Plenty and Nelson most positive at -12% and -10% respectively.
It is unclear why these provincial areas would be most confident given the paucity of activity, except perhaps that investors in those regions may reflect the sunnier outlook of cashed up ru-ral investors.
Hawke’s Bay-based valuers Turley & Co say sentiment is “stiffly negative,” reflecting muted activity. The most recent sale in a Bayleys auction last month was a high-profile leasehold property in Station St in the heart of Napier’s bulk retail area, for $557,500 at a 12.46% (discounted be-cause of the leasehold). There have been a hand-ful of large commercial sales in recent months but most at sub-$2 million levels.
There has been little new development this year following completion of several commer-cial projects in 2007-08. There was a minor flur-ry of investment sales early this year but most of the new space is held by owner occupiers. Vacant space is easy to find even if some of it requires
refurbishment. Havelock North’s niche office market expanded between 2001-08 and features the best quality office building in Hawke’s Bay, completed last year. Another anchored by child care provider Porse is near completion at the cor-ner of Napier Road and Karenema Drive.
Turley & Co forecasts weaker office rental growth as values decline and expect conditions to persist into 2012. In the absence of rental ratchets, some landlords will face reduced rents.
Even so, Turley & Co says demand con-tinues for high-calibre commercial properties, especially in the lower value range up to about $2.5 million, but little demand for lesser quality premises.
Landlords and potential investors have be-come discerning about the strength of tenants
“We expect an increased incidence of sale-and-leasebacks in 2009-10, for capital-raising, restructuring or reinvestment. However, a major-ity of organisations are lease occupiers already so we do not foresee a flood of leaseback activity.”
Most local office developments of 2005-08, were retained by developer-investors. The main exception is the WHK building in Hastings (re-cently sold at $4,740,000). It comprises a Wallace redevelopment of the former NZ Aerial Mapping building. There is a considerable physical supply
of industrial zone land with much of it owned by land bankers. Developers of the Severn S subdivision reported pre-sales at unprecedented values in mid-2008 but now the development is stalled sales not completed. The nearby Mersey St industrial subdivision has also halted.
Large industrial sections are still for sale at Whakatu.
Napier City’s proposed business park con-cept for 30ha near Prebensen Drive will be some years away given the recession.
Valuer Pat Turley from Turley & Co in Hawke’s Bay is consulting to optimistic rural retailer, Farmlands, which is planning a develop-ment and sales programme selling eight North Island stores that operators in the chain will lease back.
The sales will be made from a pool of exist-ing and yet-to-be developed Farmlands stores. During the last 12 months Farmlands has opened new stores in Taupo and Te Kuiti and the ac-quired Skeltons, a horticultural advisory busi-ness. Hawkes Bay is a likely prospect for another outlet.
By 2011 Farmlands aims to have more than 45 stores operating throughout the North Island, capturing more than 25% of the rural retail market.
Hawke’s Bay investors least dour but investment muted
NORTH SHORE > Where: Level 1, 9 Anzac St, Takapuna> Details: A confidential party leased a refurbished and partitioned 182m2 office floor with two carparksto a confidential party for $35,000 a year ($173/m2) > Agent: Nick Howe-Smith, Bayleys North Shore Commercial
> Where: 3 Anzac St, Takapuna> Details: A confidential party leased to a confidential party a 259m2 office floor, with five carparks, on 1 ROR with a two-yearly rental review for $60,000 a year gross> Agent: Christina Heaven, Bayleys North Shore Commercial
> Where: Rear warehouse, 155 Wairau Rd, Glenfield, North Shore> Details: A confidential lessor leased 400m2 retail (ground floor) with four carparks on 350m2 yard, outgoings $15.40/m2, for $32,000 a year (rental $80/m2) with 2x1 ROR, with annual
rental reviews to a confidential lessee > Agents: Greg Healey and Ranjan Unca, Bayleys North Shore Commercial
> Where: 52 Cirrenway Drive, Albany> Details: A confidential lessor leased 694m2 retail (two floors) with 2 ROR with rental reviews at renewal for $80,000 a year ($124/m2) with 10 carparks (included in rent to a confidential lessee> Agent: Laurie Burt, Bayleys North Shore Commercial
> Where: Unit I, 5 Miro Place, Albany> Details: A confidential party leased 75m2 industrial space (two floors) with two carparks to a confidential party for $12,000 rental a year gross ( $160/m2 gross) with 1 ROR and one rental rental review.> Agents: Caleb Belling and A S Tracey, North Shore Commercial
> Where: Unit A, B9 Victoria Rd, Devonport
> Details: A confidential party leased a floor, 107m2, of industrial propery to a confidential party for $20,000 a year ($186/m2), with 1x1 ROR> Agent: Richard Moors, Bayleys North Shore Commercial
> Where: Unit 5, 6 Rosedale Rd, Albany> Details: A confidential party leased 58m2 retail space to a confidential; party with 1x3 ROR and one rental review for $14,000 rental a year> Agent: Richard Moors, Bayleys North Shore Commercial
> Where: 38 Anvil Rd, Silverdale> Details: A confidential party leased 636m2 retail space (one floor) with 10 carparks to a confidential party with two yearly rental reviews and rights of renewal for $55,000 rental a year> Where: Rosemary Wakeman, Bayleys North Shore Commercial> Where: Unit C, 25 Ashfield St, Wairau Valley> Details: Robert Ludovici leased 139m2
LEASES
Transactions
NZ Property Investor 7
Transactions
retail (two floors) with two carparks for $13,500 a year to David Jenkin> Agent: Ranjan Unka and Greg Healey, Bayleys North Shore Commercial
> Where: 12E Saturn Place, Albany> Details: A confidential party leased 263.3m2 retail space (two floors) with five carparks, to a confidential party for $30,000 a year($113.9/m2) with three rights of renewal> Agent: Laurie Burt, Bayleys North Shore Commercial
> Where: Unit 6c,84 Ellice Rd, Wairau Valley> Details: A confidential party leased 125.4m2 retail to a confidential party with two carparks on a 1x2 ROR, rental review in 2011, for $12,210 annual rental> Agent: Trevor Duffin, Bayleys North Shore Commercial
> Where: Unit 5, 76 Paul Matthews Rd> Details: A confidential party leased one floor of an industrial building, 186m2, with six carparks and $46pa/m2 outgoings to a confidential party for $25,000 rental a year with 2x2 ROR> Agents; Richard Moors and Caleb Belling, Bayleys North Shore Commercial
> Where: 35 Anvil Rd, Silverdale> Details: A confidential party leased one floor industrial space (440m2), outgoings $8300pa/m2, with 10 carparks, to a confidential party for
$34,000 rental a year, with 1x2 ROR. The tenant will tidy up office space and do floors in return for two months rent holiday> Agent: Rosemary Wakema , Bayleys North Shore Commercial
> Where: Unit O, 86 Bush Rd, Albany> Details: A confidential party leased 76m2 (a floor) of a building with two carparks ( rental $15pw) and $50pa/m2 outgoings to a confidential party for $19,060 rental a year plus opex and GST ($230/m2)with 2x3 ROR two yearly> Agent: Caleb Belling, Bayleys North Shore Commercial
> Where: A3 396 Rosedale Rd, Albany> Details: A confidential family trust leased a 156m2 two story apartment office building with three carparks to Christchurch-based Internet Co on a two year term with two rights of renewal for $27,560 rental a year> Agent: John Parry-Crooke, Bayleys North Shore Commercial
> Where: Building E, 42 Tawa Drive, Albany> Details: A confidential party leased 250m2 offices to a confidential party with six carparks for $66,720 with a two year rental review> Agent: Ryan De Zwort, Bayleys North Shore Commercial
> Where: L1, 17 Anzac St, Takapuna> Details: A confidential party leased a floor (121m2 and a common area) of an industrial buildings to a
confidential party with one carpark (rental $30pw) for $30,897 a year on 1x2 ROR> Agents: Christina Hearch and Nick Howe-Smith, Bayleys North Shore Commercial
> Where: Unit D, 16 Link Drive, Wairau Valley> Details: A confidential party leased 305m2 retail space with eight carparks and outgoings $27/m2 to a confidential party for $73,00 rental a year with two yearly reviews and 1x6 ROR > Agent: Matt Mimmack and Christina Heaven, Bayleys North Shore Commercial
CHRISTCHURCH> Where: 8 Langstone Lane, Papanui> Details: A confidential party leased 324m2 warehouse/office space used for health products manufacturing for three years, opex included to a confidential party for $38,000 a year with GST and 1x3 ROR> Agents: Debby Kerr and James Stringer, Harcourts Commercial
> Where: 606 Colombo St> Details: A confidential party leased 700m2 retail and office space with two carparks for five years and three month, opex of $5132 included, with 1x2 ROR for $55,00 a year and GST to a confidential party> Agent: Lindsay Curd, Harcourts Commercial
LEASES
SALES AUCKLAND> Where: 1c, Mid City, 239 Queen St, Auckland City> Details: A confidential party sold 79m2 retail space on one floor to a confidential party for $2.67m. The annual net rental income is $169,800 and outgoings are $19,527.83> Agents: Lyle Flood, Michael Block, Paul Dixon and James Chan, Bayleys North Shore Commercial
NORTH SHORE> Where: 2/39 Apollo Drive, Albany> Details: A confidential party sold 164m2 vacant office space with five carparks to a confidential party for $428,000> Agents: Ryan de Zwart, Caleb Belling,
Richard Moors, Bayleys North Shore Commercial
> Where: Unit 608,Maison Commercial, Auburn St, Takapuna> Details: A confidential party sold new 102.7m2 office space (a vacant floor) with three carparks to a confidential party for $350,000> Agent: Nick Howe-Smith, Bayleys North Shore Commercial
> Where: Unit C1, 59 Apollo Drive, Mairangi Bay> Details: A confidential party sold two near new floors of office space, 126m2, with four carparks to a confidential party for $445,000 on a 7.77% yield. The
property is tenanted by BBR Design at $34,610 a year> Agents: Caleb Belling and Damian Stephen, Bayleys North Shore Commercial
>Where: 1B Nile Rd, Albany> Details: A confidential party sold two floors freehold mixed use in a 1980s building, with 14 carparks. The property is tenanted by PIHC Ltd for $118,000 annual net rental income for $1,340,000 on an 8.85% yield> Agents: Ryan De Zurant and Lyle Flood, Bayleys North Shore Commercial
> Where: Unit 8, 86 Bush Rd, Albany> Details: A confidential party sold 76m2 of a 1990s freehold building with three
8 NZ Property Investor
Despite signs of growing concern in pockets of Australia’s mortgage market, Australians are feeling cautiously confident in their ability to service debt as falling interest rates take effect, according to the Genworth Financial 2009 Mortgage Trends Report.
Genworth CEO Martin Barter said the somewhat optimistic results were surpris-ing given expectations for rising unem-ployment and the likelihood for this to translate into increased mortgage defaults.
“We are seeing the impact of increases in unemployment and falling household incomes resulting from under-employ-ment in our arrears figures,” Mr Barter said. “While this increase is up from a rela-tively low base, the trend shows that small increases in unemployment can quickly translate into repayment difficulties for homeowners. So it’s interesting to see a falling number of struggling borrowers in this year’s report,” he said.
Genworth is the leading provider of lenders mortgage insurance in Australia, having insured more than $300 billion in residential mortgages since 1965.
Genworth surveyed 2000 consumers during April and May on their attitudes to mortgage and property markets for its annual mortgage trends report. The 2009 report found 17% of borrowers struggled to meet their mortgage repayments in the past 12 months, down from 2008’s figure of 23%.
The majority (51%) cited higher living costs and other debt obligations (26%) as the primary reasons for hardship. As more Australians comfortably meet their mortgage repayments due to lower inter-est rates, a growing number (43%) believe now is a good time to buy property, up from 33% in 2008.
While tentative optimism is emerging, financial conservatism reigns as Australians tighten their belts and build economic buffers to weather the downturn. This year’s report showed 21% of respondents had no debt compared with 18% in 2008 and 15% in 2007. The number of borrowers overpaying their mortgages also increased to 41%, up from 31% in 2008. Furthermore, discretionary debt is down as Australians deleverage en masse.
Mr Barter warned that despite these finan-
cial buffers, caution is needed. “This year’s re-port shows consumer sentiment is respond-ing to falling mortgage costs, however the effects of rising unemployment and under-employment remain unknown,” he said.
Unemployment remains a threat for 24% of respondents, with 13% of borrowers hav-ing less than one month’s mortgage repay-ments in reserve in the event they lose their job. The number of variable rate loans surged to 85% in 2009 (up from 66% last year) and high loan to value loans above 90% climbed to 35% from 21%.
The global financial crisis has seen con-sumers nominate the stability of their lender as the second most important factor driving their satisfaction – a first for the five-year re-port. No exit or early repayment fees remain the No 1 satisfaction driver (apart from inter-est rates) as overall satisfaction rates contin-ues to be high.
Despite declining competition reducing the number of choices for borrowers, the pro-portion of broker written loans has increased to 41%, up from 30% in 2005. Positive senti-ment towards brokers is also growing.
Global property
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SALES
Transactions
Mortgage research shows tentative signs of Aussie consumer optimism
carparks, outgoings $2500 approximately, for $263,705 at a yield of 7.8% to a confidential buyer. The property is tenanted by Shoe Fit Clothing at $20,569 annual net rental income > Agent: CB, Bayleys North Shore Commercial
> Where: 54 Tarndale Grove, Albany> Details: A confidential party sold a 1996 480m2 freehold building on 1281m2
with 12 carparks to a confidential party for$1,171,500 on a 8.87% yield. The property is tenanted by UL international (NZ) Ltd for $104,000 a year> Agent: Ryan De Zwart and Damian Stephen, Bayleys North Shore Commercial
> Where: 6 Croffield Lane, Wairau Park> Details: A confidential party sold a freehold industrial building on 2835m2 to a confidential party for $1.4 million on a 7.68% yield. The property is tenanted by Placemakers at $107,622 a year.> Agents: Trevor Duffin and Laurie Burt, Bayleys North Shore Commercial
> Where: 1 7Baypark Place, Beachhaven> Details: A confidential party sold a
2171m2 1978 freehold industrial building on 4244m2 land to a confidential party for $1.5 million on a 10.67% yield. The property is tenanted by Gulf Rubber NZ Ltd on an annual net rental income of $159,989> Agent:s Trevor Duffin and Laurie Burt, Bayleys North Shore Commercial
> Where: 1/10 Triton Drive, Albany> Details: A confidential party sold two floors of a vacant 2003 industrial building (396.4m2)with four carparks to a confidential party for $660,000> Agent: Laurie Burt, Bayleys North Shore Commercial
> Where: 357 Pine Valley Rd, Dairy Flat> Details: A confidential party sold a 6.1524ha freehold lifestyle property to a confidential party for $930,000 > Agent: Ranjan Unka, Bayleys North Shore Commercial
> Where: Unit F, 33 Porana Rd Wairau Valley> Details: Gordon and Elizabeth Soper sold a 224m2 vacant freehold industrial propery to John Fallwell for $315,000
> Agent: Ranjan Unka and Greg Healey, Bayleys North Shore Commercial
> Where: Unit 7, 10 Canaveral Drive> Details: A confidential party sold two floors of a 300m2 four-year old industrial building with six carparks to a confidential party for $601,000 on an 8% yield. The property is tenanted with an annual net annual income $49,000> Agent: Laurie Burt, Bayleys North Shore Commercial
> Where: 144B Target Rd, Glenfield> Details: Boskonic Holding Land2 Ltd sold 92.8m2 ( a floor) of a 1997 freehold industrial with 11 carparks to a confidential party for $636,000 on an 8.1% yield, with 1x5 ROR. The building is tenanted by North Shore Building Supplies Ltd for an annual net rental income of $52,000> Agent: Danjan Unka and David Devereux, Bayleys North Shore Commercial
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