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Playing a waiting game


It seems like the country has been in a holding pattern for too long, but astute buyers are recognising that a real window of opportunity is still wide open.

The phrase being bandied around in business circles to describe the economic state of the nation is “survive to ‘25” and the Reserve Bank of New Zealand’s latest Official Cash Rate (OCR) announcement did nothing to dispel this.

The central bank’s hawkish monetary policy statement off the back of an unchanged OCR of 5.5 percent, cautioned that interest rates will likely remain higher for even longer in the quest to return inflation back to the desired band of one to three percent.

So while the broader property market waits for that seemingly elusive low inflation to return, it’s also holding out for clarity around which government policy settings will change – especially relating to prioritised projects, infrastructure and immigration thresholds – and, as we go to print, awaiting the first coalition budget.

The infrastructure piece is important for the economic well-being and growth of regional New Zealand. Transport Minister Simeon Brown recently announced a new Roads of Regional Significance programme to abut the already established Roads of National Significance scheme.

The regional projects announced are Penlink, Waihoehoe Road, State Highway 1 Papakura to Drury, the State Highway 1 and 29 intersection, State Highway 58 improvements, Melling, a Queenstown package and three Canterbury packages.

These initiatives would ignite interest in landholdings and development already underway in some of the country’s most progressive cities and towns.

It feels like 2023 was the trough in terms of transactional volumes and values for commercial and industrial property.

The various property sectors are re-rating, and valuations will follow off the back of market sales evidence. This will give property owners and prospective buyers more clarity around pricing.

Anecdotally, building owners are not resorting to distressed exits from the market, however, there could be some quintessential duck action going on with calm at the surface and some frenetic paddling underwater.

The banking sector is well-capitalised and working with borrowers to strategise for flexibility, however, loan-to-value weightings will become more relevant and significant among both mainstream banks and non-bank lenders.

Activity-wise, Bayleys’ commercial and industrial division has clocked up higher sales volumes year-to-date than the comparable period last year, and we’re starting to see stronger transactional evidence for sales in the over-$20 million bracket as well-capitalised private investors get the leap on institutional buyers.

Having sat in on the recent New Zealand Green Building Council Housing Summit, we also hear from industry leaders about how ESG principles are being embedded into build-to-rent (BTR) developments and how BTR could ease housing supply and affordability issues.

To uncover where opportunities lie in the current market, talk to us and let’s keep the conversations going. The waiting game can only go on for so long, so get match-ready with us to take advantage of the market before it enters the next real estate cycle.

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