New Zealand potential property hotspot

KUALA LUMPUR: With the continuing economic uncertainty in Europe, the high Australian dollar and expensive property in Singapore and Hong Kong, New Zealand could become a new hotspot for property investment.

“New Zealand has been off the radar for many years, but the time is ripe for investors to look at properties there. The country has a resilient economy, which can be attributed to its location within Asia-Pacific, and timing. Asia is the growing economy and many of the rich around the world are migrating their assets to Asia, so the wealth is shared,” said Alice Chow, head of international projects of CBD Properties Sdn Bhd and regional consultant for First Lead Consultants Sdn Bhd.

CBD Properties is marketing the 132 Vincent St apartments in Auckland by Tawera Group Ltd. The project marks the realtor’s first foray into the international market.

According to a Jones Lang LaSalle (JLL) independent investment report commissioned by Tawera, a key component of New Zealand’s investment market is the health of the economy, business and government environment in which the real estate sector is intertwined. Auckland, said Chow, is a particular area of growth.

Chow: New Zealand has been off the radar for many years, but the time is ripe for investors to look at properties there.

“The population of the city of 1.4 million is expected to reach 2.1 million in 2040 and the government has embarked on a 20-year plan, the Central City Master Plan (CCMP), to bring life and vibrancy back to the city centre,” said Chow.

Auckland city centre has an estimated population of just over 22,000 and is a major commercial hub with about 1.4 million sq m of office space. The local authority forecasts a population growth of 27,000 new residents per year until 2036, with 75% of residents living in the central business district.

The CCMP is part of the 30-year strategy, Auckland Plan, that aims to transform Auckland into the world’s most livable city. Three key goals in CCMP are turning the city into an exemplar of urban living with a wide choice of high quality residential properties, becoming a world leading hub for higher education, research and innovation and the hub of an integrated regional transport system.

JLL noted a dearth of new apartment developments, completions and major refurbishment in the recent years as developers affected by the global economic crisis exited the market. While the situation is manageable at present, a shortage of well-positioned, high quality apartments in the city centre is expected as the population grows.

“Developing properties in New Zealand is different from Malaysia. A developer has to set up a trust for the money collected from buyers and they are not allowed to touch the cash until after handover. This way, the buyers are protected,” said Chow.

However, she added that this means only developers with deep pockets and strong cash flow are able to develop, adding to the lack of completions.

JLL reported that the apartment market is now characterised by improved maturity and more discerning purchasers with very little new supply under consideration.

According to government valuer Quotable Value, in February this year property values in Auckland were up 5.1% year-on-year and 1.9% above the 2007 peak.

Believing these factors bode well for investors, Chow hopes the 132 Vincent St project launch and exhibition this weekend at One World Hotel in Bandar Utama, Petaling Jaya, will give investors an idea of what the Auckland property market can offer them.

“There are no stamp duty and capital gains tax in New Zealand. For this development, the developer is offering a guaranteed 6.5% rental yield per year for three years,” said Chow. Situated in the heart of the CBD, the development offers 2- and 3-bedroom apartments with built-ups between 699 and 1,291 sq ft. Prices start from NZ$405,000 (RM1 million).


This article appeared on the Property page, The Edge Financial Daily, March 9, 2012.