Commercial real estate is not often discussed by the general public, but it holds important clues to the state of the residential real estate market that are hugely valuable to homeowners. Over the last two years, Whangarei and beyond has seen incredible growth in the commercial sector that really, puts the Auckland market to shame. But what does this mean for residential real estate? Keep reading and you will find out…
Firstly, you need to understand that the general state of business across the country really isn’t great. The latest ANZ Business Outlook survey shows that national business confidence is falling across all sectors – some having their lowest results since 2008. 23% were pessimistic about the year ahead when surveyed in April compared to only 20% in March – so even month-on-month confidence is declining.
Despite this national outlook, the Whangarei commercial real estate market is performing exceedingly well. A surprising fact given that when business confidence is down, traditionally the commercial market slows too.
While speaking to the Northlanders, Pete Peeters from NAI Harcourts in Whangarei revealed the local market is out-performing major city results in terms of returns for investors. “We are seeing a return on investment of between 7-9 percent. By comparison Auckland is getting returns of between 3 and 5 percent on investment purchases.”
Pete Peeters explained that since the election there has been a high level of interest in development land around Marsden point and Waipapa when speaking to True Commercial. He said, “The success of the Ruakaka area has never been in doubt as it has New Zealand’s only oil refinery along with a naturally deep harbour and a large, sheltered bay for ships waiting to enter port.
“How fast it develops will largely depend on government action around rail and roading infrastructure, and the ability of Northland MPs to promote the need for these critical works to be completed in a timely manner.”
Interestingly, Whangarei’s success has shifted some national trends including the infamous commercial and industrial property “Golden Triangle” extending from Auckland to Hamilton and Tauranga. Mike Bayley spoke to True Commercial and shared his views about this shift saying that Whangarei’s success is pushing the triangle into a Golden Diamond. “2018 is the year when the triangle morphs into a diamond as the positive effects of that growth extend north to Whangarei and beyond,” he said.
The fundamentals of a strong commercial property market lie in low vacancies and strong yields – something that can only occur with population growth and economic development. These are two things that have been consistent in Whangarei over the last 18 months and the commercial market is proving this. But, what does all of this mean for the residential market?
It means that house price growth is unlikely to fall into decline as more development enters the region bringing with it demand for housing. We have watched the rate of growth slow over the last six months, but it is very surely, still growing. We don’t think this is going to change any time soon and to be honest, we’re proud of it. Go Whangarei!