NZ Property Investor

Privately circulated to commercial investors, vendors, professionals and financiers JULY 27 2009 / ISSUE 28

DEVELOPMENT
RESTRICTION
LIFTED
Selective consultation
North Shore City
Council has opened
up its tight restric-
keeps public in dark
tions on property Hurunui Water project finally going public – to local storm of protest
development in the
Birkenhead area by Chris Hutching Ministry of Agriculture’s Sustainable Farming Fund al-
investing $19 million located $225,000 toward the project in late 2003, and in
to improve the waste An irrigation project backed by rural property owners July 2008 an additional $385,000 was awarded. In ad-
water system. in the Hurunui District north of Canterbury has lodged dition the project has received support from the district
A moratorium was resource consents to damn the pristine Hurunui River council and Enterprise North Canterbury as well as its
placed on the lower in two places. shareholders, notably parties associated with Eskhead
Birkdale catchment The plans to irrigate 40,000ha have been around for Station, Ngai Tahu Property, and the region’s lines net-
in 2006, stopping many months and project manager, Amanda Loeffen, work company, MainPower NZ.
all development issued a media statement a couple of weeks ago launch- Last year, NZ Property Investor spoke with a man-
because the council ing the “water optimisation project.” But the lodging of ager at the Sustainable Farming Fund about the issue
would not allow any the resource consent applications last week prompted a of consultation and she said it had been a significant
added flow to the storm of protest in local newspapers from people dis- matter in the correspondence between the fund and the
wastewater network mayed at the idea of damning the lake-fed river, used irrigation company.
due to continuing by fishers and recreationists. Since that time the Hurunui Water Project has carried
dry weather over- This raises the question of how well the Hurunui out consultation only with selected stakeholder groups
flows in the area. Water Project is fulfilling its obligations to publicly and only in the rural areas in the Hurunui District.
consult on the venture. However, the Hurunui River is widely used by recre-
Approximately
The Hurunui Water Project has this obligation be- ationists from nearby Christchurch with its 300,000-odd
3600 properties were
cause it has received considerable taxpayer funds. The To page 2
affected.
The investment

OIO dealings revealed in files

the council is putting
in to a new trunk
sewer means the
existing 45-year The decision-making powers However, the plan is to re- operates in a long report avail-
old, 4.5km waste- of officials in the Overseas move discretion from govern- able at www.converge.org.nz/
water main will be Investment Office will be ment ministers to decline appli- watchdog/95/8sealo.htm based
replaced. increased under changes being cations. on files it sought from the of-
The project uses proposed by the National-led A quite different perspective fice.
new technologies in- government. to the debate is expressed by a This report outlines the issues
cluding underground Finance Minister Bill English long time anti-foreign invest- surrounding the planned sale
micro-tunnelling and outlined the government’s in- ment group called Campaign some years ago (subsequently
directional drilling tentions last week but has yet to Against Foreign Control in abandoned) by Brierley to sell
techniques where provide details of actual changes Aotearoa. a major stake in Sealord fishing
possible to ensure to the Overseas Investment Act. Although many New Zea- group to overseas interests.
less disruption to Announcing the shift, Mr landers disagree with CAFCA’s The sale was prevented when
residents, road and English pointed out that 98% uncompromising stance, the the then government exercised
park users. of all applications are ratified group has compiled some fas- its discretion.
– Jazial Crossley anyway, raising questions about cinating data about the way The report outlines the
why the changes are imperative. the Oversea Investment Office To page 2

EDITORS CHOICE
> Keen interest delays Fiji auction > Work starts on $220m housing plan > August agenda Page 5
Page 2 Page 4
> Hawke’s Bay investors least dour but
> Brothel to make room for Rugby World > Local body ‘bond bank’ Page 4 investment muted Page 6
Cup hotel Page 3 > Real estate paperwork put into plain > Leases and sales Page 6,7 and 8
English Page 5 > Mortgage research shows tentative
> Bowker outlines $50m philosophy
Page 3 > Crockers eyes Waitakere City potential signs of Aussie consumer optimism
Page 5 Page 8
NZ PROPERTY INVESTOR IS A PUBLICATION OF THE NATIONAL BUSINESS REVIEW
2 NZ Property Investor

Keen interest delays Fiji auction

Investors keen to sell out of Fiji – but
potential investors from around the
world are showing interest
Jazial Crossley
The Momi Bay resort in Fiji was sup-
posed to go under the hammer at auction last
week but it has been delayed by one month
because interest has flooded in from around
the world.
Real estate agency Bayleys is marketing
the resort, and it announced that the sched-
uled auction will be postponed until 1.30pm
on Tuesday, August 25.
Bayleys managing director John Bayley
said investor interest had come from various
international locations, and the extra month
was required to give potential bidders time to
inspect the property.
While the majority of enquiries were from
New Zealand and Australian investors, hope-
ful bidders also made contact from Canada,
the US, the UK, India, Singapore, Malaysia,
Korea, Hong Kong, and the United Arab
Emirates.
“We have received about 70-odd calls from
interested potential bidders,” Mr Bayley said.
The 107ha resort has 350 residential prop-
erties on it, and half finished golf course and
hotel.
The resort is now in the hands of mortgag-
ee holder Fiji National Provident Fund which
hopes to recover just shy of $60 million from
the auction.
Bridgecorp investors put $106 million in
to the project but PricewaterhouseCoopers
receivers have advised them to expect to re-
cover only 10c in the dollar.
The August auction will take place at the
Natadola Beach Intercontinental Fiji Golf Re-
sort and Spa.

Selective consultation at Hurunui

From page 2
population.
NZPI asked Hurunui Water Project’s
manager Amanda Loeffen why the Hurunui
Water Project had never held any public
meetings or advertising that would allow
the Christchurch public to participate.
She said the Hurunui Water Project
had engaged stakeholder groups while
acknowledging that the wider public of
Christchurch would only have the oppor-
tunity via the resource consent process that
has now begun.
The Sustainable Farming Fund contract
requires recipients of taxpayer funds to
show that such a project is consistent with
environmental and cultural values; involve
key stakeholders from a community of in-
terest wider than the applicant group, early
enough for them to influence project de-
sign; and produce evidence that a water de-
velopment project is an essential element
for the socio-economic development of the
Hurunui and Waipara areas.
Hurunui Water Project identified as
stakeholders – farmers within the potential
supply area; 15 landowners with potential
storage sites on their land; 36 community
organisations in the Hurunui District; two
Ngai Tahu runanga; North Canterbury For-
est and Bird; North Canterbury Fish and
Game; Ecologic Foundation; Department
of Conservation; North Canterbury Feder-
ated Farmers; Water Rights Trust; Envi-
ronment Canterbury and Hurunui District
Council. Several meetings were also held
in country halls for the wider community
in Hurunui.
Meanwhile, opponents of the scheme
are seeking a conservation order. The hear-
ing was completed recently and the result
is due out this month.
Hurunui Water Project has vowed to ap-
peal any order.

OIO decisions revealed in files

From page 2
recommendations of OIO officials, which CAF-
CA claims amounted to acting as lobbyists for
the companies involved.
A more recent example was when the for-
mer Labour government prevented the sale of
Auckland International Airport to overseas in-
terests.
Under the latest changes announced by Mr
English, the government delegates more powers
to the OIO officials.
“This move alone is expected to reduce the
number of ministerial decisions 40%t and cut
about two weeks off application assessment
times.”
In addition, several types of transactions “of
a minor, technical or temporary nature” have
been exempted from the act. These include some
underwriting transactions and sales within a
group of companies with shared ownership.
In the next few weeks the government will
undertake the second part of the review, aimed
at three main areas of the act. Issues include:
> whether the thresholds determining
which land and business investments are
screened are set at the right level – so “only
genuinely sensitive assets are captured”.
> providing greater certainty for investors, by
removing the ability to substantially change
overseas investment rules during applications.
> simplifying the screening of investments in
sensitive land, while ensuring that overseas in-
vestors are subject to a higher standard than
domestic investors.
– Chris Hutching

PUBLISHER’S INFORMATION
Editor Reporter Design Accounts
Deborah LaHatte Chris Hutching Julia Collins NZ Property Investor is published by
DDI: 09 912 2718 Phone: 03 981 1050 DDI: 09 912 2735 Fourth Estate Holdings Ltd
Email: nzproperty@nbr.co.nz Email: c.hutch@clear.net.nz Email: jcollins@nbr.co.nz Level 14, Citigroup Building
23 Customs St East
Reporter Advertising Subscriptions Auckland, New Zealand
Jazial Crossley Freepost 2519 PO Box 1734, Auckland
Todd Scott PO Box 1734, Auckland 1015 Ph 09 307 1629, Fax 09 373 3997
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Email: jcrossley@nbr.co.nz Email: tscott@nbr.co.nz Email: customerservices@nbr.co.nz ISSN 1175-9909
 NZ Property Investor 3

New Auckland hotels to be built

in time for Ruby World Cup
Two new developments start an
expected rush
Jazial Crossley
The Shell service station and Famous Flora’s
at the corner of Pitt St and Vincent St in the
Auckland CBD will soon be no more, making
way for a new hotel.
Australian-owned Metro Hospitality will
build its first New Zealand property on the
site, to be completed in time for the Rugby
World Cup.
That’s one of several hotels expected to
be built in the next two years to meet tourist
demand
It will have 170 rooms, a swimming pool,
conference facilities, and a restaurant/bar and
will meet the four star standard.
The hotel is being developed by Auckland
based Gaowoo.
Hawkins Construction will build the hotel,
and Peddle Thorp Architects are designing it.
Metro Hospitality is owned by ASX-listed
Transmetro Corporation. It owns multiple ho-
tels in Australia, including six in Sydney.
Transmetro chief operating officer George
Bedwani said it was the group’s first New Zea-
land hotel.
“The company has been contemplating a
move across the Tasman for some time and has
considered a number of opportunities in Auck-
land, Wellington and Christchurch with Auck-
land as the main target,” Mr Bedwani said.
“The group is looking to expand in Austra-
lian cities in addition to pursuing other oppor-
tunities in New Zealand.”
Iconic brothel Famous Flora’s ceased trad-
ing in January after competition from home
operations limited the client turnover.
Meanwhile, Tainui Group Holdings has
confirmed speculation it will build a new hotel
at Auckland International Airport. ICON TO DISAPPEAR: The closed Famous Flora’s
An agreement has been announced brothel and a service station will be replaced by a
between the airport and the tribe together with tourist hotel
Accor Hospitality for a 263-room, 12-storey
Novotel.
Tainui Group Holdings managing director
Mike Pohio said the project would go to tender
shortly with aim of a completion date of June
2011.
“That will allow Accor the normal commis-
sioning period to make sure it is fully function-
ing in time for the big wave from the World
Cup,” Mr Pohio said.
The 14,000sq m hotel designed by Warren
& Mahoney will be next to the airport’s inter-
national terminal.
Mr Pohio said the hotel will create jobs and
contribute to long term economic growth.
“The hotel will assist Auckland and New
Zealand tourism and trade. It will cater for
the inevitable economic recovery and growth
when it returns.”
It will be Accor’s 30th hotel in New Zea- TAINUI PLANS: the 263-room hotel will also be built in
land. time for the world cup

Bowker outlines $50m philosophy

Chris Hutching
One of the founders of Caniwi Capital Partners, Troy Bowker, con-
firms that he has not taken a position as an economic adviser to the
prime Minister after being tipped as a front runner last year.
UK expatriate Mr Bowker told NZ Property Investor that he
and John Key had talked but he was instead focusing on his plans
to build a $50 million commercial property portfolio here (the $50
million is a leveraged figure).
“We’re looking at low risk commercial stuff in places that are
important to the tenant. Petone, where we bought The Warehouse
is a case in point. It’s between Wellington and Lower Hutt with a
good population for retailing. (Caniwi also recently acquired a Mi-
tre 10 property on the North Shore, Auckland).
“We’re also taking a very long term view. Two years ago yields
were 6-7% while interest rates were over 9%. Now we’ve got the
opposite situation and I don’t think they will rise dramatically.
It won’t suit the recovery prospects anticipated by Reserve Bank
and the Treasury, and they won’t want to encourage a higher cur-
rency either.
Since returning to New Zealand in late 2008 with his Canadian
wife he has acted quickly.
“On a couple of deals recently we’ve competed with Bob Jones.
We’ve priced competitively and offered short conditional periods
of just five days or so.
“We’ve also competed against some of the syndicators in the
market. A recent one was the Foodtown in Quay St Auckland where
Oyster Bay Group made an offer. The deal is yet to be settled. On
a $20 million building the syndicators are offering $2 million to $3
million more. And they’ll fund them through high borrowing.
“The syndicators are offering 9% returns compared with our
expectation of 18%. Their returns are eaten up by management fees
and commissions. If it was their money (the syndicators) there’s no
way they’d be paying some of these prices. They skew the prices in
the short term.
“So we don’t want them around. Of course if ever I come to sell
my properties I might be happy to see them.”
Mr Bowker is the main funder in Caniwi, along with co founder
Matt Fraser. Caniwi is mainly funded by Mr Bowker. They have the
support of four or five wealthy investors interested in entering joint
ventures with them. They are not planning offers to retail investors,
they said.
4 NZ Property Investor

Work starts Briefs

Real estate watchdog appointees named

on $220m Six members have been appointed to the Real
Estate Agents Authority.
and formerly held senior positions at BNZ and
National Australia Bank;  David Russell, of Wel-

housing They are: John Auld, a commercial and

property lawyer from New Plymouth; Barrie
Barnes, JP, of Auckland, who has had a long
lington, who played a leading role in the Con-
sumers’ Institute and many other consumer
rights organisations for more than 35 years.  

plan involvement in the real estate industry;   De-

Jazial Crossley
The $220 million Wellington City Council has
promised to commit to state housing is being
put to good use, with works starting late last
week on flats in Newtown.
The Te Ara Hou flats are the first complex
of residential state housing to undergo an
upgrade as part of the scheme between the
council and Government.
Wellington City Council has 40 state
housing complexes in its portfolio, all of which
it plans to upgrade in the next 20 years.
The $220 million has come from
government for the 13 complexes targeted in
the first 10 years, with the council promising
to fund the second half of the project.
Given priority for refurbishment are those
that are in the worst condition, and most in
need of earthquake strengthening.
The 67-unit Te Ara Hou complex, built in
the late 1970s, is home to 180 people. The up-
grade of the flats will account for $50 million
of the funding scheme.
Housing Upgrade project director Byron
Roff said, “Over the course of the next year,
Te Ara Hou will be given a new lease of life,
making it a better place to live for all of the
tenants.
:They will have warmer, drier units that are
better suited for modern living.”
The work on Te Ara Hou includes insula-
tion, upgrading the kitchen and bathrooms,
carpet, paint and curtains, landscaping of out-
door areas. The flats are due to be completed
in June 2010.
nise Bovaird, of Auckland, who has held senior
corporate and consultancy risk management
roles for the past 12 years, and who was the
president of the New Zealand Institute of
Chartered Accountants in 2007; Joan Harnett-
Kindley, of Wanaka, who is experienced in the
operation and administration of real estate
businesses; Peter McDermott, of Wellington,
who has a background in banking and finance
Business owners join forces
Harcourts realtor Eliot Falconer has bought
into Team Wellington, which operates three
Harcourts offices in Wellington. Mr Falconer,
who is already a shareholder in other busi-
nesses which operate a further 14 Harcourts
offices in the Lower North Island, recently
Merlot director bankrupted
Grant Maxwell Petrie, the other half of failed
property investment company Merlot’s
directorship, has been adjudicated bankrupt
in the High Court at Auckland.
Two months ago, his co-director Stuart
Herron was bankrupted.
Merlot Investments and Merlot Homes
sold and managed properties in a similar
manner to Blue Chip.
And, like Blue Chip, it failed to pay people
their guaranteed rental returns.
Merlot Homes has been struck off the
Companies Office register following its
liquidation, and Merlot Investments is in
liquidation and receivership.
The Real Estate Agents Act 2008 signifi-
cantly reformed the regulation of the real es-
tate industry and focused on shifting regula-
tory responsibility away from the industry to
independent bodies.   
The Real Estate Agents Authority will replace
the Real Estate Institute of New Zealand as the
oversight body for the industry.
The act comes fully into effect on
November 17.
became a co-owner of Team Wellington Ltd
alongside existing shareholders Antonia
Brown and Marty Scott.
Team Wellington Ltd operates Harcourts
offices in Karori, Kilbirne and central
Wellington.
Investors paid $1.5 million in deposits,
understanding the funds would be held in a
trust but this was not the case.
Depositors were then treated as unse-
cured creditors and told by the liquidators
Waterstone Insolvency they should assume
all their funds were lost.
The application for Mr Petrie’s bank-
ruptcy was filed by creditor Metecno, which
supplies building materials including roof
panels.
Mr Petrie currently owns a semi-rural
property just back from the ocean in Bay of
Plenty’s Rotoiti and has part-ownership of a
property in Auckland’s upmarket Orakei Rd.

Local body ‘bond bank’ examined

The government is working with local body representatives to in-
vestigate setting up a “bond bank” to help councils finance up to
$30 billion of planned infrastructure over the next decade, Finance
Minister Bill English says.
The establishment of the so-called bond bank to reduce councils’
cost of borrowing was one of the Jobs Summit Top Twenty initia-
tives. It was also recommended by the Financial Markets Develop-
ment Task Force.  A joint government and Local Government New Zealand steer-
A study will look at whether combining councils’ borrowing
needs would result in lower interest rates and transaction costs.
This arrangement is common overseas. The study will also investi-
gate options for how such an organisation could be run.
“The government recognises that councils face a big spike in
costs over the next decade to provide adequate sewerage, water and
roads. Some of this will be appropriately financed by debt,” Mr
English says.
“We are sympathetic to any arrangement that can lower the cost
of local authority borrowing and we are keen to help councils work
together to see if they can do this. Any arrangement that comes out
of this process will be entirely voluntary.”
ing group set up to look at the proposal expects to receive the study
in August. Decisions about whether such a vehicle is feasible, and if
so how to operate it, will follow.
The study is being conducted by advisers Cameron Partners and
Asia-Pacific Risk Management.

Real estate paperwork
put into plain English
Making documents easier to
understand
Jazial Crossley
Newly designed real estate documents have
been created by the Real Estate Institute to
simplify the forms involved in the house sale
process.
But chief executive Christine le Cren said
while the forms are simplified, they are not
dumbed down to the point of losing either
their legal standing or meaning.
“We realise there will always be some
tension between the relative safety of us-
ing precedent documents and terminology,
and their plain English equivalents,” Mrs
Le Cren said. “However...the expectation is
actually quite the opposite.”
A lawyer who presented a paper at the
2008 international Plain English conference
Clarity said there are no recorded instances
of plain English contracts causing a legal
dispute due to the phrasing.
The Real Estate Institute documents
were given extensive readings by members
of the legal sector.
Crockers eyes Waitakere
City potential
Crockers Research focuses on property po-
tential in Waitakere City this month where
Statistics New Zealand predicts that be-
tween 2001 and 2026 the population will
grow about 50% from a base of 170,000.
Manukau City and Rodney, by compari-
son, are projected to grow more than 60%.
Waitakere’s population also has a youth-
ful skew with a median age in 2006 being
33 years old (three years below the national
figure).
In 2006, 18% of Waitakere households
were single person dwellings (vs Manukau
City, 14%; Auckland City, 23%).
Nearly 5% of households had more than
one family living together (vs Manukau
City’s 8% and just 3% nationwide). Single
parent families also make up a significant
proportion of households in Waitakere;
12% (well behind Manukau on 18%, but
ahead of Auckland City on 7).
How does Waitakere rate as a property
investment opportunity?
At first glance Waitakere may not appear
to offer huge opportunities. But on the posi-
Executive members of the Property Law
Section of the New Zealand Law Society
reviewed and commented on the drafts, and
Hamilton lawyer Barry Gunson gave his
seal of approval.
“The overriding consideration has been
to make sure they are legally sound and
suitable for the current real estate environ-
ment,” Mr Gunson said.
Wellington-based plain English special-
ists Write Limited re-wrote the forms, with
fifty drafts to perfect them.
“[They] are designed to do away with
ambiguity and complexity,” Mrs Le Cren
said.
“People who are buying or selling a
property have a right to understand the im-
plications of what they are signing.”
The forms were designed and laid out by
Optimal Usability, with bold headings and
open text taking the place of small print for
a clearer reading experience.
“We believe the forms will be over-
whelmingly popular with the public who
need to have absolute confidence when
making an important life decision,” Mrs Le
Cren said.
tive side, only 19% of Waitakere’s rental
stock was provided by central government,
compared with 24% in Auckland City and
35% in Manukau.
Property prices also tend to be less vol-
atile. Residential sales figures show that
Waitakere experienced a slower median
price rise over the few years to the 2007
peak, and has experienced a shallower de-
cline since.
Rental levels rose just 14% from 2003 to
2008 in Waitakere City, ahead of Auckland
City’s 11% but well behind figures of up to
24% recorded in other parts of the city.
Waitakere fares well from a tenant per-
spective, with rental levels at the relatively
low end compared to sales prices.
On average, the median price in Waitak-
ere for 2008 equated to around 27 years av-
erage rent, compared to 21 years in 2003.
In contrast, Auckland City sales prices
are higher, but even higher rental levels
mean that it takes around 21 years rental to
buy the median house, compared to the 19
years it took in 2003.
NZ Property Investor 5
August agenda
Interesting resort tender:
 August 5: A 1.06ha Waiwera, Auckland site
with resource consents for spa and accom-
modation and another site currently used as
a holiday park. Bayleys
Three top conferences:
August 12-13: NZ Council for Infrastructure
Development Building Nations Sympo-
sium 2009 brings together the nation’s deci-
sion makers and industry leaders to discuss
the way ahead for infrastructure develop-
ment in New Zealand. Attendees will include
infrastructure constructors and developers,
asset owners and operators, major users,
service providers, financial intermediaries
and investors, Te Papa, Tongarewa,
www.vision6.com.au/
ch/1xp4nz1/760189/52405dpg2.html>
August 14-16: NZ Property Investors’
Federation conference, Buck the trend,
Alexandra Park, Auckland
Top speakers include long-time investor Olly
Newland; financial consultant Martin Hawes;
US psychologist Dr Fred Grosse; investor and
mayor John Banks, Housing Minister Phil
Heatley; Auckland apartment specialist mar-
tin Dunn, banker Craig Moffatt; investor Liz
Harris; accountant and investor mark Withers;
investor David Whitburn.
www.propertyconference.org.nz
August 31- September 1: 13th Annual Com-
mercial Leasing & Property Management
conference Crown Plaza Auckland, New
strategies for a new market situation
Over the past year, commercial leasing space
has undergone an enormous transforma-
tion. Before it was a landlord’s market, and
commercial real estate for lease was scarce,
particularly in the main centres. Now it is truly
a tenant’s market – and the rules of the game
have changed fast! Speakers include Alan
McMahon, director Research and consulting,
Colliers International on the falling Auckland
market; Peter Mence, general manager, ING
Property Trust on lease negotiations and rent
reviews in a falling market; 
John Church,
national director – leasing, Jones lang LaSalle
on how to avoid the risks of vacancy and how
to market surplus space; a tenants’ panel.
Coming up:
Building consents, June, Wednesday July 29
Reserve Bank, official cash rate, Thursday
July 30
Goodman Property Trust, annual meeting,
Wednesday August 5
Accommodation survey for June, August 12
Retail trade survey: June 2009 quarter,
August 14
ING Property Trust, annual meeting, Mon-
day August 24
Building consents for July, August 28
6 NZ Property Investor

Hawke’s Bay investors least

dour but investment muted
Chris Hutching
A recent Colliers International survey of com-
mercial property confidence showed levels in
Hawke’s Bay were third equal highest, with
Palmerston North at minus 18% with Bay of
Plenty and Nelson most positive at -12% and
-10% respectively.
It is unclear why these provincial areas would
be most confident given the paucity of activity,
except perhaps that investors in those regions
may reflect the sunnier outlook of cashed up ru-
ral investors.
Hawke’s Bay-based valuers Turley & Co say
sentiment is “stiffly negative,” reflecting muted
activity. The most recent sale in a Bayleys auction
last month was a high-profile leasehold property
in Station St in the heart of Napier’s bulk retail
area, for $557,500 at a 12.46% (discounted be-
cause of the leasehold). There have been a hand-
ful of large commercial sales in recent months
but most at sub-$2 million levels.
There has been little new development this
year following completion of several commer-
cial projects in 2007-08. There was a minor flur-
ry of investment sales early this year but most of
the new space is held by owner occupiers. Vacant
space is easy to find even if some of it requires
refurbishment. Havelock North’s niche office
market expanded between 2001-08 and features
the best quality office building in Hawke’s Bay,
completed last year. Another anchored by child
care provider Porse is near completion at the cor-
ner of Napier Road and Karenema Drive.
Turley & Co forecasts weaker office rental
growth as values decline and expect conditions
to persist into 2012. In the absence of rental
ratchets, some landlords will face reduced rents.
Even so, Turley & Co says demand con-
tinues for high-calibre commercial properties,
especially in the lower value range up to about
$2.5 million, but little demand for lesser quality
premises.
Landlords and potential investors have be-
come discerning about the strength of tenants
“We expect an increased incidence of sale-
and-leasebacks in 2009-10, for capital-raising,
restructuring or reinvestment. However, a major-
ity of organisations are lease occupiers already so
we do not foresee a flood of leaseback activity.”
Most local office developments of 2005-08,
were retained by developer-investors. The main
exception is the WHK building in Hastings (re-
cently sold at $4,740,000). It comprises a Wallace
redevelopment of the former NZ Aerial Mapping
building. There is a considerable physical supply
of industrial zone land with much of it owned
by land bankers. Developers of the Severn S
subdivision reported pre-sales at unprecedented
values in mid-2008 but now the development is
stalled sales not completed. The nearby Mersey
St industrial subdivision has also halted.
Large industrial sections are still for sale at
Whakatu.
Napier City’s proposed business park con-
cept for 30ha near Prebensen Drive will be some
years away given the recession.
Valuer Pat Turley from Turley & Co in
Hawke’s Bay is consulting to optimistic rural
retailer, Farmlands, which is planning a develop-
ment and sales programme selling eight North
Island stores that operators in the chain will lease
back.
The sales will be made from a pool of exist-
ing and yet-to-be developed Farmlands stores.
During the last 12 months Farmlands has opened
new stores in Taupo and Te Kuiti and the ac-
quired Skeltons, a horticultural advisory busi-
ness. Hawkes Bay is a likely prospect for another
outlet.
By 2011 Farmlands aims to have more
than 45 stores operating throughout the North
Island, capturing more than 25% of the rural
retail market.

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Leases North Shore
> Where: Level 1, 9 Anzac St, Takapuna
> Details: A confidential party leased
a refurbished and partitioned 182m2
office floor with two carparksto a
confidential party for $35,000 a year
($173/m2)
> Agent: Nick Howe-Smith, Bayleys
North Shore Commercial
> Where: 3 Anzac St, Takapuna
> Details: A confidential party leased
to a confidential party a 259m2 office
floor, with five carparks, on 1 ROR with
a two-yearly rental review for $60,000
a year gross
> Agent: Christina Heaven, Bayleys
North Shore Commercial
> Where: Rear warehouse, 155 Wairau
Rd, Glenfield, North Shore
> Details: A confidential lessor leased
400m2 retail (ground floor) with four
carparks on 350m2 yard, outgoings
$15.40/m2, for $32,000 a year (rental
$80/m2) with 2x1 ROR, with annual
rental reviews to a confidential lessee
> Agents: Greg Healey and Ranjan
Unca, Bayleys North Shore Commercial
> Where: 52 Cirrenway Drive, Albany
> Details: A confidential lessor
leased 694m2 retail (two floors) with
2 ROR with rental reviews at renewal
for $80,000 a year ($124/m2) with
10 carparks (included in rent to a
confidential lessee
> Agent: Laurie Burt, Bayleys North
Shore Commercial
> Where: Unit I, 5 Miro Place, Albany
> Details: A confidential party leased
75m2 industrial space (two floors) with
two carparks to a confidential party for
$12,000 rental a year gross ( $160/m2
gross) with 1 ROR and one rental rental
review.
> Agents: Caleb Belling and A S Tracey,
North Shore Commercial
> Where: Unit A, B9 Victoria Rd,
Devonport
> Details: A confidential party leased
a floor, 107m2, of industrial propery to
a confidential party for $20,000 a year
($186/m2), with 1x1 ROR
> Agent: Richard Moors, Bayleys North
Shore Commercial
> Where: Unit 5, 6 Rosedale Rd, Albany
> Details: A confidential party leased
58m2 retail space to a confidential;
party with 1x3 ROR and one rental
review for $14,000 rental a year
> Agent: Richard Moors, Bayleys North
Shore Commercial
> Where: 38 Anvil Rd, Silverdale
> Details: A confidential party leased
636m2 retail space (one floor) with 10
carparks to a confidential party with
two yearly rental reviews and rights of
renewal for $55,000 rental a year
> Where: Rosemary Wakeman, Bayleys
North Shore Commercial
> Where: Unit C, 25 Ashfield St, Wairau
Valley
> Details: Robert Ludovici leased 139m2

Transactions
Leases retail (two floors) with two carparks for
$13,500 a year to David Jenkin
> Agent: Ranjan Unka and Greg
Healey, Bayleys North Shore
Commercial
> Where: 12E Saturn Place, Albany
> Details: A confidential party leased
263.3m2 retail space (two floors) with
five carparks, to a confidential party for
$30,000 a year($113.9/m2) with three
rights of renewal
> Agent: Laurie Burt, Bayleys North
Shore Commercial
> Where: Unit 6c,84 Ellice Rd, Wairau
Valley
> Details: A confidential party leased
125.4m2 retail to a confidential party
with two carparks on a 1x2 ROR, rental
review in 2011, for $12,210 annual
rental
> Agent: Trevor Duffin, Bayleys North
Shore Commercial
> Where: Unit 5, 76 Paul Matthews Rd
> Details: A confidential party leased
one floor of an industrial building,
186m2, with six carparks and $46pa/m2
outgoings to a confidential party for
$25,000 rental a year with 2x2 ROR
> Agents; Richard Moors and
Caleb Belling, Bayleys North Shore
Commercial
> Where: 35 Anvil Rd, Silverdale
> Details: A confidential party leased
one floor industrial space (440m2),
outgoings $8300pa/m2, with 10
carparks, to a confidential party for
Sales Auckland
> Where: 1c, Mid City, 239 Queen St,
Auckland City
> Details: A confidential party sold 79m2
retail space on one floor to a confidential
party for $2.67m.The annual net rental
income is $169,800 and outgoings are
$19,527.83
> Agents: Lyle Flood, Michael Block, Paul
Dixon and James Chan, Bayleys North
Shore Commercial
North Shore
> Where: 2/39 Apollo Drive, Albany
> Details: A confidential party sold 164m2
vacant office space with five carparks to a
confidential party for $428,000
> Agents: Ryan de Zwart, Caleb Belling,
$34,000 rental a year, with 1x2 ROR.
The tenant will tidy up office space
and do floors in return for two months
rent holiday
> Agent: Rosemary Wakema , Bayleys
North Shore Commercial
> Where: Unit O, 86 Bush Rd, Albany
> Details: A confidential party leased
76m2 (a floor) of a building with two
carparks ( rental $15pw) and $50pa/
m2 outgoings to a confidential party
for $19,060 rental a year plus opex and
GST ($230/m2)with 2x3 ROR two yearly
> Agent: Caleb Belling, Bayleys North
Shore Commercial
> Where: A3 396 Rosedale Rd, Albany
> Details: A confidential family trust
leased a 156m2 two story apartment
office building with three carparks to
Christchurch-based Internet Co on
a two year term with two rights of
renewal for $27,560 rental a year
> Agent: John Parry-Crooke, Bayleys
North Shore Commercial
> Where: Building E, 42 Tawa Drive,
Albany
> Details: A confidential party leased
250m2 offices to a confidential party
with six carparks for $66,720 with a
two year rental review
> Agent: Ryan De Zwort, Bayleys
North Shore Commercial
> Where: L1, 17 Anzac St, Takapuna
> Details: A confidential party
leased a floor (121m2 and a common
area) of an industrial buildings to a
Richard Moors, Bayleys North Shore
Commercial
> Where: Unit 608,Maison Commercial,
Auburn St, Takapuna
> Details: A confidential party sold new
102.7m2 office space (a vacant floor) with
three carparks to a confidential party for
$350,000
> Agent: Nick Howe-Smith, Bayleys North
Shore Commercial
> Where: Unit C1, 59 Apollo Drive,
Mairangi Bay
> Details: A confidential party sold two
near new floors of office space, 126m2,
with four carparks to a confidential
party for $445,000 on a 7.77% yield.The
NZ Property Investor 7
confidential party with one carpark
(rental $30pw) for $30,897 a year on
1x2 ROR
> Agents: Christina Hearch and Nick
Howe-Smith, Bayleys North Shore
Commercial
> Where: Unit D, 16 Link Drive, Wairau
Valley
> Details: A confidential party
leased 305m2 retail space with eight
carparks and outgoings $27/m2 to a
confidential party for $73,00 rental a
year with two yearly reviews and 1x6
ROR
> Agent: Matt Mimmack and
Christina Heaven, Bayleys North Shore
Commercial
Christchurch
> Where: 8 Langstone Lane, Papanui
> Details: A confidential party leased
324m2 warehouse/office space used
for health products manufacturing
for three years, opex included to a
confidential party for $38,000 a year
with GST and 1x3 ROR
> Agents: Debby Kerr and James
Stringer, Harcourts Commercial
> Where: 606 Colombo St
> Details: A confidential party leased
700m2 retail and office space with
two carparks for five years and three
month, opex of $5132 included, with
1x2 ROR for $55,00 a year and GST to a
confidential party
> Agent: Lindsay Curd, Harcourts
Commercial
property is tenanted by BBR Design at
$34,610 a year
> Agents: Caleb Belling and Damian
Stephen, Bayleys North Shore Commercial
>Where: 1B Nile Rd, Albany
> Details: A confidential party sold two
floors freehold mixed use in a 1980s
building, with 14 carparks.The property is
tenanted by PIHC Ltd for $118,000 annual
net rental income for $1,340,000 on an
8.85% yield
> Agents: Ryan De Zurant and Lyle Flood,
Bayleys North Shore Commercial
> Where: Unit 8, 86 Bush Rd, Albany
> Details: A confidential party sold 76m2
of a 1990s freehold building with three
8 NZ Property Investor

Transactions
Sales carparks, outgoings $2500 approximately,
for $263,705 at a yield of 7.8% to a
confidential buyer.The property is
tenanted by Shoe Fit Clothing at $20,569
annual net rental income
> Agent: CB, Bayleys North Shore
Commercial
> Where: 54 Tarndale Grove, Albany
> Details: A confidential party sold a
1996 480m2 freehold building on 1281m2
with 12 carparks to a confidential party
for$1,171,500 on a 8.87% yield. The
property is tenanted by UL international
(NZ) Ltd for $104,000 a year
> Agent: Ryan De Zwart and Damian
Stephen, Bayleys North Shore Commercial
> Where: 6 Croffield Lane, Wairau Park
> Details: A confidential party sold a
freehold industrial building on 2835m2 to
a confidential party for $1.4 million on a
7.68% yield. The property is tenanted by
Placemakers at $107,622 a year.
> Agents: Trevor Duffin and Laurie Burt,
Bayleys North Shore Commercial
To submit your
transactions > Where: 1 7Baypark Place, Beachhaven
please email
nzproperty@nbr.co.nz > Details: A confidential party sold a
2171m2 1978 freehold industrial building
on 4244m2 land to a confidential party
for $1.5 million on a 10.67% yield. The
property is tenanted by Gulf Rubber NZ
Ltd on an annual net rental income of
$159,989
> Agent:s Trevor Duffin and Laurie Burt,
Bayleys North Shore Commercial
> Where: 1/10 Triton Drive, Albany
> Details: A confidential party sold
two floors of a vacant 2003 industrial
building (396.4m2)with four carparks to a
confidential party for $660,000
> Agent: Laurie Burt, Bayleys North Shore
Commercial
> Where: 357 Pine Valley Rd, Dairy Flat
> Details: A confidential party sold a
6.1524ha freehold lifestyle property to a
confidential party for $930,000
> Agent: Ranjan Unka, Bayleys North
Shore Commercial
> Where: Unit F, 33 Porana Rd Wairau
Valley
> Details: Gordon and Elizabeth Soper
sold a 224m2 vacant freehold industrial
propery to John Fallwell for $315,000
> Agent: Ranjan Unka and Greg Healey,
Bayleys North Shore Commercial
> Where: Unit 7, 10 Canaveral Drive
> Details: A confidential party sold two
floors of a 300m2 four-year old industrial
building with six carparks to a confidential
party for $601,000 on an 8% yield. The
property is tenanted with an annual net
annual income $49,000
> Agent: Laurie Burt, Bayleys North Shore
Commercial
> Where: 144B Target Rd, Glenfield
> Details: Boskonic Holding Land2
Ltd sold 92.8m2 ( a floor) of a 1997
freehold industrial with 11 carparks to
a confidential party for $636,000 on an
8.1% yield, with 1x5 ROR. The building
is tenanted by North Shore Building
Supplies Ltd for an annual net rental
income of $52,000
> Agent: Danjan Unka and David
Devereux, Bayleys North Shore
Commercial

Global property
Mortgage research shows tentative signs of Aussie consumer optimism
Despite signs of growing concern in
pockets of Australia’s mortgage market,
Australians are feeling cautiously confident
in their ability to service debt as falling
interest rates take effect, according to the
Genworth Financial 2009 Mortgage Trends
Report.
Genworth CEO Martin Barter said the
somewhat optimistic results were surpris-
ing given expectations for rising unem-
ployment and the likelihood for this to
translate into increased mortgage defaults.
“We are seeing the impact of increases
in unemployment and falling household
incomes resulting from under-employ-
ment in our arrears figures,” Mr Barter said.
“While this increase is up from a rela-
tively low base, the trend shows that small
increases in unemployment can quickly
translate into repayment difficulties for
homeowners. So it’s interesting to see a
falling number of struggling borrowers in
this year’s report,” he said.
Genworth is the leading provider of
lenders mortgage insurance in Australia,
having insured more than $300 billion in
residential mortgages since 1965.
Genworth surveyed 2000 consumers
during April and May on their attitudes
to mortgage and property markets for its
annual mortgage trends report. The 2009
report found 17% of borrowers struggled
to meet their mortgage repayments in the
past 12 months, down from 2008’s figure
of 23%.  of respondents, with 13% of borrowers hav-
The majority (51%) cited higher living
costs and other debt obligations (26%)
as the primary reasons for hardship. As
more Australians comfortably meet their
mortgage repayments due to lower inter-
est rates, a growing number (43%) believe
now is a good time to buy property, up
from 33% in 2008.
While tentative optimism is emerging,
financial conservatism reigns as Australians
tighten their belts and build economic buffers
to weather the downturn. This year’s report
showed 21% of respondents had no debt
compared with 18% in 2008 and 15% in 2007.
The number of borrowers overpaying their
mortgages also increased to 41%, up from
31% in 2008.  Furthermore, discretionary debt
is down as Australians deleverage en masse.
Mr Barter warned that despite these finan-
cial buffers, caution is needed.  “This year’s re-
port shows consumer sentiment is respond-
ing to falling mortgage costs, however the
effects of rising unemployment and under-
employment remain unknown,” he said.  
Unemployment remains a threat for 24%
ing less than one month’s mortgage repay-
ments in reserve in the event they lose their
job.  The number of variable rate loans surged
to 85% in 2009 (up from 66% last year) and
high loan to value loans above 90% climbed
to 35% from 21%.
The global financial crisis has seen con-
sumers nominate the stability of their lender
as the second most important factor driving
their satisfaction – a first for the five-year re-
port.  No exit or early repayment fees remain
the No 1 satisfaction driver (apart from inter-
est rates) as overall satisfaction rates contin-
ues to be high.
Despite declining competition reducing
the number of choices for borrowers, the pro-
portion of broker written loans has increased
to 41%, up from 30% in 2005.  Positive senti-
ment towards brokers is also growing.