12 November
North Harbour Commercial Property Group
Tony Alexander | Chris Dibble, Colliers International
Pathfinder Solutions’ Kenina Court welcomed visitors to the North Shore Golf Club and encouraged them to consider the lessons of 2020. “It’s time to cut ties with old ways of thinking” she stated, reminding attendees that “investing is a team sport”.
Tony Alexander is one of New Zealand’s most well-regarded economists – a prolific commentator with a flair for bringing stats, forecasts, and abstract concepts to life. He was also perhaps the first economist to mention COVID-19 in one of his reports, on 9th January 2020.
Tony began his presentation by focusing on the residential property market, and particularly how residential construction can be positive for the economy because of the high number of associated businesses involved, including materials’ manufacturers, tradies, engineers, and architects. The potential negative impact could be on the public sector’s “shovel-ready projects” as these private contracts cut into a shrunken labour force.
He reported that the economy is performing far better than had been expected, but this is perhaps because forecasters had not much data to work with. It has not been possible to factor in past learnings of “What usually happens at times like this” because they simply do not exist. Especially in light of the promising news of a vaccine, Tony feels that this is the right time to re-engage with pre-COVID plans. He did however urge caution when forecasting. This year, Kiwis have been redirecting the money that was intended, for example, for overseas holidays into enduring consumer goods, home improvement projects and other spending closer to home. This trend will not continue indefinitely, and he advised of a “payback” in approx. 12 months’ time.
He trotted his audience apace through thoughts on the migration boom, interest and inflation rates, and changing LVR (loan to value ratio) rules.
Reflecting his generally optimistic outlook, Tony concluded by affirming that a Biden presidency is likely advantageous for New Zealand, not least because the administration is more likely to engage in multilateral trade agreements.
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Chris Dibble is Colliers International’s national director. He echoed Tony’s message of the vagaries of forecasting, citing the example of BNZ and Westpac which vary in their predictions of economic recovery by almost 24 months.
By sharing graphs broken down into regions and sectors (retail, industrial and office) Chris helped his audience understand not just the current situations with building, sales activity and land values, but how these compare to past trends. There are however massive data lags for 2020, and he also acknowledged the impact of increased working from home on commercial space requirements. Indeed, many attendees confirmed they had adopted this practice at least to some extent; Mondays and Fridays seemed most popular!
Chris concluded with four key insights:
The economy is faring better supported by government and RBNZ.
The North Shore has similar – but not identical – trends to Auckland.
Not all fundamentals are fundamental. Priorities vary.
Currently there are low interest rates and still a demand for prime yielding assets. There is “room to trim further” as property investment is still outperforming government 10-year bonds.
Event sponsored by Pathfinder Solutions
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