The regions: ‘not just about the milk’
Gisborne took the top spot for GDP figures with 5 per cent annual average growth.
Despite the downturn in the dairy market, regional commercial and industrial property markets have been performing strongly and are expected to continue to do so, says John Church, Bayleys national director commercial.
Church says one of the most pleasing aspects of Bayleys Commercial’s strong performance in its latest March financial year, with revenue exceeding budget by around 25 per cent, has been the contributions coming from regional offices outside of the metropolitan centres.
“While Auckland still accounts for by far and away the biggest volume and value of commercial and industrial property transactions, it is provincial areas such as the Bay of Plenty that have provided the largest percentage growth in our business over the past year – and are forecast to do so again in our current financial year,” Church says in his introduction to Bayleys’ latest Total Property portfolio.
“Some of this is due to the ‘flight from Auckland’ factor, with Auckland-based investors looking outside their very competitive home market for more affordable opportunities offering better yields. But it has to be more than that – most investors do their homework and normally steer clear of areas with poor growth prospects no matter how attractive the income yields may be.”
Church says the ANZ’s latest quarterly regional trends economic overview, for the December 2015 quarter, shows quarterly growth rates for a number of provinces hitting multi-year highs, led by Taranaki at 3.8 per cent, Bay of Plenty 3.2 per cent, and Nelson-Marlborough 3.1 per cent. Business confidence improved in all 14 regions measured by the ANZ’s economics team, following falls in the third quarter, while consumer confidence was up in 13 regions.
In the annual GDP figures for the 2015 calendar year, Gisborne took out took the top spot with 5 per cent annual average growth, a 13-year high for the province. Growth in four other North Island regions was above the national average: Bay of Plenty 4.8 per cent, Northland 4.3 per cent and Hawke’s Bay 3.3 per cent with Auckland showing 4.2 per cent growth.
“So without minimising the hardship that many dairy farmers are experiencing at present, it is clear that provincial New Zealand is not just all about the milk. We appear to have developed much more diverse regional economies,” says Church.
“Other agriculture sectors such as beef, horticulture – and in particular kiwifruit and apples – as well as viticulture are currently performing well, helped by a drop in the New Zealand-US dollar exchange rate over the past 12 months. Record tourism and net migration numbers are also benefiting provincial New Zealand.
“All these factors are having a positive impact on most provincial commercial property markets and are resulting in some excellent outcomes for provincial vendors”.
Church says more regional vendors are taking advantage of increasing investor interest in provincial offerings, with 64 of the 98 properties featured in Bayleys’ latest Total Property portfolio being from outside of Auckland.
This interest has also prompted Bayleys to undertake a regional commercial and industrial property expo in Auckland on June 9 to coincide with the release of the next Total Property in early June. “While we have held these types of expos before for residential property, this is a first for the commercial market and is part of our focus on strengthening our national offering to vendors in all parts of the country,” says Church.
John Church, Bayleys national director commercial.