It is interesting to look back on the past twelve months and reflect on what mattered and what didn’t, what could have been and what should have been.

World Cup aside the real story has been the lactose overdose that has given the New Zealand economy a bit of a gut ache, particularly for many in the rural sector. The white gold, on which we have all become somewhat addicted, did turn a little sour. Some would say it was a great reality check which has in part “rebalanced” the expectations of the politicians, prospective dairy farmers and potential rural investors. For dairy land values, a slow down and adjustment has been timely, as things looked like they could get out of kilter. Reduced demand for our milk products also encouraged Fonterra to look in the mirror, give itself a haircut and trim some of the fat.

Thankfully, we are still popular with migrants, expats, and tourists who love Hobbiton, green pastures and mountains.

While there may have been bloat in the dairy sector, fortunately meat protein, kiwifruit, manuka honey, logs and wine are in demand. And the rest of the economy is under pinned by construction, fuelled of course by a rebuild, migration, new roads and a housing shortage in places. There is an underlying confidence that we seem to be on track. There are of course always humps to negotiate. But NZ Inc is still envied from afar.

The aging “rock star” economy loves nothing more than the drug of low interest rates. There are always side effects however and because Auckland continually parties too hard, the big governor introduced measures to help contain the bubble that was looking like causing trouble. The new disclosure requirements may have done the trick. Bubbles equal headaches in my experience. Good move sir.

Greece was never far from the spotlight in 2015. Sick of austerity, the Greeks in their wisdom voted in a young prime minister who then played the brinkmanship game with Angela and lost. Fortunately the Euro is printed on “Greece-proof” paper and Greece is still part of the family. But poor old Europe has now got a major migrant problem. Coupled with the terror in Paris, it makes you feel lucky to be working and living in this country.

Our troubles, such as they are, are relatively minor. China, prefers our food as they move from mining to dining. Our protein and crops are preferred to the Rocks of Oz. The TPPA has not seen us sell our soul. We don’t have Tyson Fury to represent us. And Donald Trump is not our immediate problem.

Is there no-one else in America that could be a half credible President?

Our sleepless nights over 2015 were worrying whether Dan and Ritchie would step up. Those fellows certainly proved to all that class is permanent. And wasn’t it good to see Bill Webb lifted high at Twickenham. What a great example of good planning, good management, self belief and faith.

Arise Sir Shag! and bring on the new flag!

One of the big issues for 2015 has been which flag? Let’s keep things in perspective however and celebrate the fact that we can even contemplate changing the flag. Personally I reckon it is high time to move on from our Aussie cousin’s lookalike. Let’s get out of that shadow.

It’s our turn for four stars and a fern. Let’s flag the mother country……union can hit the road Jack!

For the past 12 months, in our wider region, the property market has been a challenge for some, exciting for others but for valuers always interesting. After a slow start, the residential market finally started to find second gear. We even had evidence of “Asian” buyers venturing into our region from Auckland. It had to happen. Our residential values are still well “below par” and not much above the pre GFC days of 2008. When will Aucklanders work it out that you don’t have to sit in a car for two hours a day? The benefits of living in a smaller regional centre are really tangible on so many levels.

For the commercial sector, we are continuing to see record low yields for good properties. Many investors remain unsatisfied. The market seems to have factored in that interest rates will be low for a long time coming. In Palmerston North, we have recently witnessed what is by our standards, a large investment property sell at a 7.00% return. More sales of a similar ilk will likely follow as good product is increasingly difficult to find.

The majority of sales through 2015 are still in the band 7.50% – 8.50%. Where there are questions around lease tenure certain, seismic strength, lease covenant, etc, then investors are still cautionary.

As has been reiterated in the past, the “gap” between well leased properties and those which potentially have vacancy issues has widened to the point where owner/operators are increasingly active in the market. Again, the low interest rates are encouraging many local businesses to purchase as opposed to entering into leases.

Retailing remains a difficult space with the impact of online shopping now the major factor in causing many well established retailers to exit the market. We are unlikely to see any significant rental growth in the retail sector for a long time. This limited rental growth and the fact that many CBD buildings are older and seismically challenged will see most CBD values maintained at best over the medium/long term.

The industrial sector is in many ways the most active for our region, with a number of developments recently completed and more planned. Manawatu is now well set as a major distribution hub for the lower North Island. The Kapiti Coast Expressway and Transmission Gully will certainly strengthen our position as an important link in moving goods across the country.

From all the staff here at Morgans Property Advisors, we look forward to a busy and interesting year in 2016. Let’s hope the big issues facing the world are brought closer to a peaceful solution, the sun keeps shining, the grass keeps growing, and the tourists keep coming.

I thank you for your ongoing support, both this year and in years past. It is very much appreciated and we look forward to continuing to offer you our expert advice and services in 2016.

Have a happy, healthy and safe Christmas break and we will see you all in the New Year.

Best regards,

Paul van Velthooven




2016 - SHAKE, RATTLE & ROLL      




2011 – More Of The Same, And Then Some More!

2010 – What Happened To Our Predictions?!

2009 – What A Difference A Year Can Make