Archive | Market

Turners of Otahuhu pulls out of Hooker chain

Published: 13 April 2005

Otahuhu real estate licensee Walter Turner has pulled out of the Australian LJ Hooker network after 5 years and gone back to being a local-for-locals business.

Mr Turner turned Kevin McGrath (Otahuhu) Ltd – part of an Auckland chain – into Turners Real Estate Ltd in 1992 but took it into the Hooker franchise in 2000. He’s kept his premises at 375 Great South Rd, in the Otahuhu shopping strip, and will continue operating as Turners, with the same sales team.

Mr Turner said that when it came to “the nitty-gritty of selling properties in suburban South Auckland, there is no substitute for local knowledge & local people who are in close touch with their diverse local communities. 

“The action takes place close to the ground here and the costs that come with an international network just don’t justify themselves in this environment.

“Our people know every aspect of the property market in this region of Auckland from Ellerslie, Panmure & Mt Wellington in the north through Otara, Otahuhu, Papatoetoe to Manukau & Mangere. This district and its variety of ethnic communities is part & parcel of their personal & professional lives.”

Turners will sell residential, rental & commercial properties and also manage properties.

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Auckland occupancy 75.7% as national accommodation figures hit new peak

Published: 13 April 2005

Auckland accommodation businesses achieved 75.7% occupancy in February and the national level, 69.2% excluding caravan parks & camping grounds, was the highest for any month since Statistics NZ started keeping these records in 1996.

Caravan parks & camping grounds are an afterthought in the statistical comparisons – in February they were down a fraction, from 20.6% to 20.4% occupancy, and in winter it gets down to the low 7% range. Even in January occupancy in this accommodation category only gets to about 34%, explaining why they’re increasingly questionable economically and being bought by people with the money to establish upmarket coastal subdivisions.

For the rest, this February was a good month.

Occupancy in the hotel sector was up from 71.7% in January 2004 to 74%, a 3.3% gain from a 1% rise in capacity & 3.5% rise in guest nights. However the average stay, looking steady at 1.7 nights/visitor, was actually down 2.7% on top of a 3.5% fall a year earlier.

In the motel & apartment sector, occupancy was up 2.5% to 73.5% on a 1.3% decline in capacity & 0.8 gain in guest nights. The average stay fell 1%.

The backpacker sector continued to grow, with a 12.9% capacity increase. Guest nights rose by 7.9%, so occupancy fell 3.6% to 61.2%.

Across all 3 sectors plus hosted accommodation, capacity rose 3.6%, guest nights 3% for a 0.6% rise in occupancy to 69.2%.

The Auckland occupancy gain was 1.9%, to 75.7%. Wellington achieved a 3.6% gain to 74.6% and Taranaki, Manawatu & Wanganui gained 10% to 51.6% – still the bottom of the table.

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Busy top end boosts B&T sales average

Published: 12 April 2005

Barfoot & Thompson’s average house sale price rose 14% in March, boosted by $1 million-plus sales.

Director Peter Thompson said the average was pushed up by 3 large sales valued at $3 million & $10 million, and another 11in the $2 million range. 15% of all the firm’s sales for the month were above $1 million.

As a result, the average was 14% above last March at $468,151.

But Mr Thompson said the whole market appeared strong, not just the top end. He said both sales volumes & prices were good across a range of price brackets, and at a wide range of branches such as Papakura & Manurewa in the south, Te Atatu & Henderson in the west, Mt Roskill & Mt Albert in central Auckland and Birkenhead & Milford on the North Shore.

“Most of the large sales were in Auckland’s eastern suburbs.  In fact our Remuera branch had a particularly successful month, selling 47 properties worth a total of almost $60 million.

“Our new North Shore Elite branch, based in Takapuna and only listing properties valued at $650,00 or more, also performed extremely well.  It sold 14 properties worth almost $11 million – a very strong result considering the branch has only been open since November.”

The rental market was firm, with 683 houses & units let during the month for an average weekly rental of $346, which was higher than at any point last year.

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Urban Land feature opens eyes on changing uses

Published: 10 April 2005

When you develop, sell or lease office or a hotel suite, what are you offering?

For most people the answer’s fairly simple: X amount of space with Y amenities at Z price.

As Ron Nyren writes in the Urban Land feature, Global citizens, global cities on the Urban Land Institute website, dimensions in a multi-use Nanjing development in China will be quite different for different users:

“SOM’s proposed Jinling Hotel Tower will stack office, residential & hotel uses, the building’s form twisting & changing shape to embody the different programmes. Offices will occupy square floor plates, the most efficient shape for that use; the luxury apartments in the 2 middle quadrants will occupy X-shaped floor plates that maximise natural light & views; and the top quadrant will contain a hotel, also in square floor plates. The building, currently in the approval process, is expected to be completed in 2008.”

In Norway, a new headquarters building he wrote about sounds like a city within a city:

“Office buildings also are starting to resemble cities in the ways they organise space to provide the kinds of informal interaction common in urban settings. The new headquarters for Telenor in Fornebu, Norway, designed by a joint venture of Seattle, Washington–based NBBJ and the Norwegian firms HUS & PKA, emphasises interaction & mobility in ways made possible only by wireless technology. The 210,000m² facility, with the capacity to accommodate more than 7000 employees, employs an open plan throughout. All paper mail is scanned on arrival for email delivery and employees are provided with cell phones & laptop computers. Cafeterias, tea & coffee bars and shops along main internal boulevards, plus meeting rooms scattered throughout the building, provide informal & formal places that encourage employees to gather & share knowledge. Employees are assigned to work zones of about 30 people each, which provide a familiar home base with shared workspaces, but employees can move their work & meetings anywhere.”

Website: Global citizens, global cities

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International tourism for tomorrow awards made

Published: 10 April 2005

The World Travel & Tourism Council has made 4 Tourism for Tomorrow awards at its annual conference in New Delhi. The awards recognise & promote best practice in tourism development all over the world.

The winners are:

Destination, Jurassic Coast, UK
Conservation, Damaraland Camp, Namibia
Investor in people, Haciendas del Mundo Maya, Mexico, and
Global tourism business, Casuarina Beach Club, Barbados.


Jurassic Coast, a partnership between more than 200 local, national & international stakeholders, Jurassic Coast has brought the principles of sustainable tourism to the Dorset & East Devon coast. This includes designation as a world heritage site and protection of both cultural & natural heritage of the region. “Jurassic Coast is showing the world how successful destination stewardship through careful tourism planning can lead to economic development & cultural revitalisation for rural & urban communities.”

Damaraland Camp, part of the Wilderness Safaris group of lodges in Southern Africa, Damaraland Camp was among the first in Namibia to successfully link tourism, community partnership & conservation. The result is an 180,000ha protected area established & managed by the local communities who directly benefit economically through tourism as partners in Damaraland Camp. In the 10 years of the project, wildlife populations in the nature conservancy area have doubled and the model of private sector/community partnership has spread to other areas of Namibia & Southern Africa.

Haciendas del Mundo Maya, the Haciendas del Mundo Maya are in Mexico’s Yucatan Peninsula and represent outstanding architecture, historical preservation & one of the world’s unique & most luxurious travel experiences. The partnership is between the Grupo Plan company, Starwood Hotels & Resorts and the Foundation Haciendas del Mundo Maya. Working closely with local Mayan communities, the Haciendas del Mundo Maya have played a key role in poverty alleviation and Mayan cultural heritage preservation. They have brought literacy training and micro-enterprise development workshops, revived traditional handicraft-making and helped to secure legal land ownership for thousands of Mayan villagers. “The Haciendas del Mundo Maya are showing how responsible tourism can be a successful business strategy and directly help to alleviate poverty at the same time. As an example of this, the Mayan villagers they work with today own & manage their own businesses that operate in partnership with the Haciendas.”
Casuarina Beach Club, the club has one of the highest occupancy rates in the Caribbean and one of the most advanced environmental hotel management systems in the world. “This goes well beyond asking guests to reuse their towels to help protect the environment. Rather, Casuarina Beach Club has water- & energy-saving devices throughout its 4ha property and staff are trained in all aspects of environmentally sensitive hotel operations. In addition, Casuarina educates its guests about sustainable tourism practices.”

Website: World Travel & Tourism Council

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Court supports Environmental Defence Society case against vegetative screening for Canterbury coastal subdivision

Published: 4 April 2005

The Environmental Defence Society has reported its pleasure at an Environment Court decision which rejected screening by vegetation plus building controls as measures to address concerns about residential development well above the existing urban line at Diamond Harbour, on Banks Peninsula.

The proposal by Dunedin-based companies Hawea Trust Ltd & TLEG Ltd was to build 7 houses on 140ha on Mt Herbert, 100m above Diamond Harbour’s existing housing line, mostly below ridgelines but still visible from a wide area, including Lyttelton, across the harbour. The area was identified as an outstanding natural landscape.

The society helped local opponents of the development, which the court found would be precedent-setting for the area.

The society has also made submissions opposing consent for a 14-lot subdivision on 56ha on the coastal cliffs near Ngaiotonga, south of Russell in the Bay of Islands.

Website: Environmental Defence Society

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Buildings with personality popular at Wellington Total Property auction

Published: 2 April 2005

Continuing strong demand for commercial & industrial property attracted large numbers of bidders to Bayleys’ Wellington Total Property auction on 24 March, with 10 out of 11 properties selling at prices ranging from $90,000 to $1.14 million.

Bayleys Capital Commercial director Mark Hourigan said 79 bids were received on the first property alone.

“The star performers were office suites & owner-occupier opportunities,” he said.

Mr Hourigan said the Wellington commercial & industrial markets showed no sign of dampening. “This auction shows that the positive trend of the past year looks set to continue, with demand from a mix of investors, developers & owner occupiers continuing to underpin the market.”

The largest sale was an industrial property in Drummond St, next to the Governor-general’s residence, which went under the hammer for $1.14 million.

Also sold were 3 character buildings in Island Bay (a café & wine bar), Adelaide Rd (the Adelaide Junction antique shop) & Majoribanks St (an old butcher’s shop).

Jill Downie, involved in all 3 sales, said the buildings dated back to the early part of last century and the bidding competition reflected the popularity of well located buildings “with personality”.

Mr Hourigan said Bayleys Wellington was consistently achieving auction clearance rates above 90% and multiple bids on all offerings. The only property to be passed in at this auction was a 3-storey 2020m² industrial building at 264-272 Taranaki St, which got a top bid of $1.53 million.

Auction results:

Drummond St, industrial property next to the Governor-general’s residence, sold for $1.14 million. It has a 2-storey 1000m² warehouse and a self-contained residential unit on 895m². The property, sold by Joanna Piatek-Dyer, has 2 tenants and is producing net rent of just over $60,000/year. She said the property had potential for residential redevelopment
Island Bay, 351 The Parade, Kai in the Bay premises in the Zino Buildings (a café & wine bar based on Maori values, but property sold vacant), 310m² on 468m² site, sold for $676,000; Jill Downie
Kilbirnie, 20-22 Bay Rd, Kilbirnie Plaza, vacant unit, 50m² ground floor & 17m² mezzanine, in 80s complex of 27 unit-titled shops, sold for $90,000; Colin Hodge
Mt Victoria, 12 Majoribanks St, vacant old butcher’s shop next to Embassy Theatre, 150m² on 191m² site, sold for $560,000 ($2932/m² land value); Jill Downie & Stathis Moutos
Newtown, 191 Adelaide Rd, the Adelaide Junction antique shop premises, with apartment space above, 280m² on 268m² site, sold for $600,000 with vacant possession; Jill Downie
Paraparaumu, 44 Marine Parade, shop 1, vacant 99m² concrete block unit in development across the road from the beach, sold for $196,000; Stephen Lange
Seaview, 113A Hutt Park Rd, industrial complex containing 16 storage units, each of 98m³ cubic capacity and leased on monthly basis, on 545m² site, sold post-auction for $400,000; Fraser Press
Te Aro, 148 Cuba St, 508m² unit-titled office floor on level 4 of the 6-storey Crombie Lockwood House, sold with vacant possession for $764,000, sold with an existing modern fitout, including large boardrooms; Andrew Smith & Joanna Piatek-Dyer
Te Aro, 82 Willis St (Press House), 2 half-floor office units, 193m² on level 2 & 187m² on level 3, sold vacant for $320,000 & $325,000; the office suites were created as a result of the strata titling of the 75-year old 6-storey building, which formerly housed the Dominion & Evening Post newspapers; sales, Chris Callear.

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9 sold through Auckland Total Property auction

Published: 31 March 2005

Bayleys Real Estate sold 9 out of 12 properties in the Auckland leg of its latest Total Property auction for $15.1 million (correcting original figure).

Results (property details to follow) from the auction at Bayleys in Auckland on Wednesday were:

Airport Oaks, 40 Richard Pearse Drive, warehouse leased to July 2009, sold for $2.66 million at 9.3% yield; Stuart Bode & Hayden Bryant.

East Tamaki, 89 Springs Rd, unit A, sold for $1.12 million at 7.1% yield; Shane Snijder.

East Tamaki, 49 Sir William Ave, 3010m² of warehouse, office & amenities, sold post-auction for $2.85 million; John Bolton & Katie Wu.

East Tamaki, 35 Stonedon Drive, combination of higher-stud & low-stud factory, minimal office in 1797m² building, sold before auction for $1.6 million at 7.84% yield; John Bolton & Roy Rudolph.

Glen Innes, 306 Apirana Ave, KFC outlet on 12-year lease from 1 November 2001, sold for $1.645 million at 6.9% yield; Richard Yang.

Grafton, 22 Burleigh St, 600m² building in 4 tenancies, part-leased, sold for $1.315 million; Michael Grainger & Colin Stewart.

Manurewa, 185 Great South Rd, passed in with vendor bid of $475,000; property earning $50,000/year gross from 6-year leases; Dave Stanley & Mike Ashton.

Morningside, 37 Leslie Ave, 1400m² industrial building on 1660m² freehold title, in 2 tenancies, highest bid of $1.65 million was at a yield of 8.5%; Kathryn Robinson, David Gubb & Mike Houlker.

Onehunga, 51A Princes St, north0facing site with road frontage & consent for 28 apartments, holding income of $80,000 plus gst, sold for $1.275 million post-auction; James Chan & Dominic Ong.

Pakuranga, 491 Pakuranga Rd, unit E, property with Government tenant on 6-year lease paying $200,000 plus gst, including outgoings/year, set aside; Mark Pittaway.

Takanini, 317 Great South Rd, 132.5m² property with 9-year lease from August 1999, sold for $1.22 million at 7.3% yield; sales, Dave Stanley & Mike Ashton.

Tuakau, 23 Carr St, 14,302m² site with about 2800m² of building, sold post-auction for $1.45 million at a 9.3% yield; Mike Ashton & Dave Stanley.

There’ll be more auction details on the BD Central website over the next couple of days.

Website: Bayleys


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South Sea bubble? Cheyne chides the economists

Published: 30 March 2005

Gary Cheyne, director of property valuation & consulting company Extensor Advisory Ltd, looked at yesterday’s story on the ANZ Bank economists’ predictions for the housing market in disbelief.

Here’s his response (click the link to the original story below):

What’s with these doomsaying economists? I’ll believe their predictions when I see them take their own advice and sell up their own houses, or when I see them predict a boom in real estate for once. There will always be an end to a buoyant period in asset prices, but so far their predictions as to timing have been uniformly wrong.

They rely, amongst other measures, upon the relationship between price & rents, saying that prices are now 35% ahead of where the ratio was in 1995.

3 things. First, in 1995 there was an open market in residential rents under a National government. Now, Housing NZ Corp has stepped in and artificially influenced rents downwards by stepping up the volume of state houses which are rented according to income. The result is an artificial downward pressure on rents, which explains part of the differential.

Second, all forms of real estate investment have shown reduced capitalisation rates since 1995. With inflation widely recognised as being under control, investment income returns have reduced across the board. Residential property is no different.

Third, housing prices are set in an owner-occupied market, not a rental market. Accordingly the single driver of affordability is interest rates, not rents. With interest rates low, and likely to remain so (remember when a 9% mortgage was a dream – considered high now after a few rounds of Reserve Bank-driven increases) there will be a positive impact on house prices.

All these 3 drivers act to increase the price:rent ratio.

South Sea bubble?  Don’t think so!

Earlier story:

29 March 2005: ANZ economists give sharp housing warning, forecast 4%-plus inflation & big dollar drop


Websites: Extensor Advisory

ANZ Bank


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ANZ economists give sharp housing warning, forecast 4%-plus inflation & big dollar drop

Published: 29 March 2005

Activity in the housing market continues to defy Reserve Bank warnings, ANZ Bank’s economists said today.

They also said, in a report containing more scary predictions than normal:

price:rent ratios are at unprecedented highs
building has become cheaper than buying an existing home
the house price:income ratio (affordability) has surpassed its 1995 peak to sit 35% above the level of 3 years ago
an $NZ shakeout could give the Reserve Bank more inflation jitters
headline inflation could top 4%
expect more 25-point interest rate raises from the US Fed, and
the $NZ could drop to US60c by Christmas instead of hovering around the economists’ previous expectation of US69c.

All signs point to significant housing excess

Chief economist John McDermott and the head of market economics & strategy, Cameron Bagrie, said in the bank’s Market focus the growth in house prices was slowing but sales had picked up in February and credit growth remained strong.

We look at a range of gauges in assessing the housing market and they are all pointing towards significant excess. Such excesses represent a double-edged sword to the Reserve Bank.

“Exuberance is adding to inflation pressure and calling for higher rates. Yet at the same time, excesses built up over the current housing cycle leaves the housing sector vulnerable to an exacerbated tightening cycle. Given these vulnerabilities, the best message to home-owners is to batten down the hatches & pay-off some debt.”

The economists said household debt:income levels had risen over the past 14 years, steepening recently, but they couldn’t keep rising indefinitely. Homeowners were insulated by low fixed rates last year but spending habits had also become more sensitive to interest rate movements. “The good days are nearing an end,” the economists said.

They said the housing price:earnings ratio was nearly 50% above its long-range average, rents were rising by less than their historical average and the rate of increae had been falling in recent quarters.

Referring to Tobin’s q (the ratio of market value of an asset to the cost to build the same item), they found building had become cheaper than buying an existing home. “While construction costs have increased by 20% over the past 3 years, house prices have risen more, further exacerbating this trend.”

On affordability, they said the ratio of house prices:income had surpassed its 1995 peak to sit nearly 35% higher than 3 years ago. “Demographic change – specifically dual-income households – increases the ability to pay back debt and consequently reduces the extent of overvaluation in the residential housing market. But an augmented ratio is still 25% higher than 2001.”

Unfortunately the bank economists went for support to The Economist magazine June 2004 issue, where it said this ratio can’t be sustained over time and predicted that house prices had to fall by 15% in the next 3 years.

Many things might happen to change the balance between ratios, one of which is a sharp fall in values across the board. I find the research by Infometrics’ senior economist, Gareth Kiernan, for the 6-monthly PMI residential property overview (last one in November) a more considered & well reasoned approach. He suggested a 4% average fall, 6% in real terms, by the middle of this year, and a range of price movements around the country’s regions over the next 3 years.

The bank economists said that, “Admittedly, a declining trend in interest rates over the past decade has supported a trend rise in the required p:e & affordability index. But even allowing for such a development, the upsurge in these ratios since 2002 defies logic.

“Moreover, interest rates have now tested higher and look to stay high for a while. Collectively, house price growth is slowing and over the next 1-3 years looks to slow further. All indicators point to a market that has perhaps gone too far and that the largest gains to be made have probably passed. The indicators also suggest that the market is ready for some correcting. House price growth has already begun to slow, net migration is easing back and interest rates are higher.

“The housing market – coming from an extended opening position and being an interest-rate-sensitive area – will be one of the areas that are vulnerable to further rate increases.”

Website: ANZ Bank


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