Business South 6

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December / January 2016

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Ngai Tahu eyes Auckland action Hugh de Lacy With the gloss going off the post-quake Canterbury rebuild and property market, South Island iwi Ngai Tahu is looking to Auckland for its next major strategic property move, although the the residential market there also appears to be weakening by the day. Ngai Tahu Properties Ltd presently has the bulk of its assets in the South Island, and most of those in the Canterbury region, but the opportunities offered by the Auckland market are too inviting to ignore, the company’s general manager for Auckland, David Kennedy, told Business South. “We’re wanting to create some geographic diversity, and the obvious place for us to look towards is the Auckland market. “All the commentators are saying that there’s a

high level of demand which isn’t being met yet, and won’t be for a few years.” Kennedy said the slowing of the rate of increases in Auckland house prices, which averaged $931,807 in November compared to $910,000in August, did not deter the company either, as these appeared to be the result of new government rules restricting investment, combined with an easing of the capital outflow from China. According to Real Estate Institute figures seasonally adjusted by the Westpac Bank, Auckland house sales fell 13% in November, after a 17% drop the previous month, while prices fell 4.4% in October and 1.9% in November. Nationally, house prices averaged $555,729 in November, up from $550,000 in October. The slowdown in the Auckland market appears to have given new life to the provincial residential market, with the Waikato and the Bay of Plenty

regions in particular benefitting from the Auckland overflow. The Christchurch residential market has been softening all year. The weakening outlook for interest rates, with the Reserve Bank this month cutting the Official Cash Rate (OCR) to 2.5% in an effort to stimulate inflation to within its 1-3% statutory target, is unlikely to re-inflate the Auckland market to any great degree, Kennedy said. “Interest rates have been quite low by historic standards for a few years, and the market’s adjusted to that reasonably well.” Kennedy said Ngai Tahu’s decision to look north, and his recent appointment as manager of that initiative, had nothing to do with the spread of the iwi’s membership beyond the South Island. “It’s a straight commercial rather than an ownership decision: Auckland has a large

population base, strong economic growth and demand for property activity, so it’s a natural place for us to look towards.” Nor does it signal that the company is shutting up shop in Christchurch or the South Island. “Some of our big land sub-divisions [in Christchurch] like Wigram and Preston Grove are coming to the end of their natural life, and I think the market here will change because most of the post-earthquake demand is being satisfied by Ngai Tahu sub-divisions and others.” While Ngai Tahu’s northern focus will be on the residential market, that should not imply a neglect of opportunities in the commercial sector, Kennedy said. “We’ve got an investment portfolio which includes commercial and retail assets, and we’ve got some successful industrial sub-divisions as well, so we’ll still be in those areas,” he said.

Queenstown top for investor confidence Chris Hutching Queenstown remains New Zealand’s number one hotspot overall for investor confidence according to a new survey. According to the latest Colliers survey, the Tauranga/Mt Maunganui had moved to second equal with Auckland. It said property investors were most confident about the industrial sector in Christchurch, Auckland, and Wellington. The survey found that investor confidence has bounced back from a dip in September after concerns were raised over lower dairy payouts and by China’s sharemarket volatility. The number of optimists outnumbered pessimists by a margin of 26% compared with a margin of 17% in September 2015. Population growth, better infrastructure, recent LVR changes and new entrants boosting competition and demand, are likely factors supporting confidence, Colliers says. “We forecast investment yields to firm further in the industrial sector over 2016 despite already passing the last cyclical peak.” The gap between property returns and interest rates remains high when compared with previous growth periods. There were 3885 responses to the survey.

INSIDE

Wild ride on Lake Wakatipu .... The high-speed semi-submersible watercraft, Seabreacher X, gets airborne in Lake Wakatipu. Run by Queenstown company Hydro Attack, the adventure acitivity has proved a hit with locals and visitors alike

Insurance industry settles down - PAGE 2

Polluted river improving - PAGE 2

since it was launched two years ago. The adrenalin-fuelled ride has been described as like riding in a cross between a fighter jet and a torpedo. See story page 5

BioGro launches assurance trial - PAGE 5

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