Waikato Business News October/November 2022
Waikato Business News has for a quarter of a century been the voice of the region’s business community, a business community with a very real commitment to innovation and an ethos of co-operation.
Waikato Business News has for a quarter of a century been the voice of the region’s business community, a business community with a very real commitment to innovation and an ethos of co-operation.
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Chamber welcomes<br />
new board member<br />
The <strong>Waikato</strong> Chamber of Commerce<br />
welcomes a new board member Caroline<br />
Batley, while Peter Nation and Emily<br />
Zhang have been re-elected.<br />
They join current board<br />
members Senga Allen,<br />
Jason Cargo, TJ Asiata,<br />
Tracey Clark, Andrew Boyd and<br />
Quinton De Bruin who weren’t<br />
up for re-election this year.<br />
The chamber board had<br />
three positions available. Peter<br />
Nation, Phil Monahan and Emily<br />
Zhang being at the end of their<br />
three-year term were standing<br />
again for re-election and were<br />
automatically nominated.<br />
In addition to Peter, Phil, and<br />
Emily’s nominations, there were<br />
four other nominations: Caroline<br />
Batley, Grant Coombes, Janey<br />
Haringa and Tim Pearson.<br />
Caroline Batley has worked<br />
as a solicitor at Bell Gully and<br />
is currently a banker for ANZ.<br />
She has governance experience<br />
through Otago University academic<br />
boards, as a sheep and<br />
beef farm trustee, president of<br />
Auckland Young Professionals,<br />
and committee member for Seddon<br />
Cricket Club and <strong>Waikato</strong><br />
Women's Fund.<br />
Peter Nation has been on the<br />
chamber board for three years,<br />
Ebbett Volkswagen<br />
support mental<br />
wellness<br />
Ebbett Volkswagen’s<br />
WE LOVE VW<br />
initiative has been<br />
supporting NZ Thoroughbred<br />
Breeders Association so that<br />
they can help with mental<br />
wellness initiatives for their<br />
staff, friends and colleagues<br />
within the industry. The<br />
Ebbett Volkswagen team<br />
supported the NZ Thoroughbred<br />
Breeders Association<br />
by donating their WE LOVE<br />
VW campervan as an auction<br />
item at the NZTNA National<br />
Breeding Awards in July. The<br />
and is currently CEO at NZ<br />
National Fieldays Society Inc.<br />
Emily Zhang has 12 years’<br />
banking experience, is a founder<br />
of several businesses and has<br />
also been on the chamber board<br />
for three years.<br />
The chamber extends its<br />
appreciation to Phil Monahan<br />
for his three years of service<br />
on the board, and all those that<br />
stood this year.<br />
Chamber chief executive Don<br />
Good says he was encouraged<br />
by the high standard of business<br />
people who had put their names<br />
forward for election.<br />
“The competition for places<br />
donation of the VW Campervan<br />
was greatly appreciated,<br />
and it was part of a<br />
“Wicked Weekend Wairarapa<br />
auction” which raised $2,800<br />
for mental wellness support<br />
within the Thoroughbred<br />
Breeders Association.<br />
The NZ Thoroughbred<br />
Breeders Association will<br />
be able to continue to support<br />
the mental wellness of<br />
the people in their industry.<br />
Both Ebbett Volkswagen<br />
and the association believe<br />
this is important after the<br />
WAIKATO BUSINESS NEWS, OCTOBER/NOVEMBER <strong>2022</strong> 9<br />
and the quality of the candidates<br />
this year is validation of<br />
the strong position the chamber<br />
is in.<br />
“Despite the disruptions by<br />
Covid, the chamber has managed<br />
to successfully hold a twice-delayed<br />
<strong>Waikato</strong> <strong>Business</strong> Awards,<br />
the first standalone Hall of Fame<br />
and dozens of other events for<br />
members.<br />
“The chamber is in good<br />
heart, with good people, strong<br />
finances and a large body of work<br />
ahead to support out members<br />
and improve their prosperity.<br />
And to top it off we have a board<br />
comprised of highly competent<br />
people who each bring their own<br />
unique skillset to the table and,<br />
collectively, they will help the<br />
chamber to build on our success<br />
in the coming year.”<br />
challenging last few years<br />
for the racing industry and<br />
their wider community. For<br />
the people who work in the<br />
thoroughbred industry it is<br />
a lifestyle, not just a job. It is<br />
great knowing that together<br />
we can help take a proactive<br />
approach to create a thriving<br />
workplace by starting conversations<br />
around mental health<br />
and wellbeing.<br />
Find out about all the<br />
great community initiatives<br />
the Ebbett Volkswagen<br />
team do.<br />
www.welovevw.nz<br />
CONVERSATIONS WITH MIKE NEALE<br />
OF NAI HARCOURTS HAMILTON<br />
Banks – We Need Them,<br />
More Than They Need Us ?<br />
The most common topic of discussion<br />
in relation to commercial and<br />
industrial real estate over the last<br />
month or so, has been around finance<br />
and borrowing – or increasing difficulty<br />
with this. To be clear, what follows might<br />
seem an unfair assessment of the banking<br />
industry, that is full of good people, but<br />
seemly constrained by the banks increasingly<br />
restrictive internal credit policies.<br />
We are having discussions every day, so<br />
it’s fair to say that where there is smoke,<br />
there is likely to be fire. Consistently we are<br />
being told by the banks that they have the<br />
ability to lend money, but what is the saying<br />
? - actions always speak louder than words.<br />
Their appetite certainly seems to have<br />
diminished over the last nine months or so.<br />
Finance and the ability to borrow is a<br />
critical element for development, whether<br />
it be residential, commercial, industrial<br />
or infrastructure, to enable us to develop<br />
and continue to grow as a city, and also as<br />
a country. Without capital it’s also incredibly<br />
difficult to invest in, upgrade and modernise<br />
assets.<br />
Invariably banks are now requiring<br />
much greater security and assessment of<br />
cashflow serviceability in order to lend.<br />
Tightening lending restrictions, along with<br />
rising interest rates is already causing some<br />
pain, which appears only likely to increase<br />
in the short term.<br />
Even as land and construction costs<br />
have increased through 2020 and 2021, the<br />
ability to borrow at viable interest rates,<br />
still paved the way for development continue.<br />
Second mortgages are now being<br />
put under the spotlight, along with second<br />
tier non-bank lenders either charging near<br />
uneconomic interest rates, wanting repayment<br />
or charging penalties.<br />
“It is well enough that<br />
people of the nation do not<br />
understand our banking<br />
and monetary system, for<br />
if they did, I believe there<br />
would be a revolution before<br />
morning” – Henry Ford<br />
While it seems highly unlikely that we<br />
are going to see an avalanche of mortgagee<br />
sales, we are already seeing signs of vendors<br />
being “instructed” that they need to<br />
get their house in order. Put simply, they<br />
will need to sell assets, often their best<br />
assets, as these are likely to realise the best<br />
prices.<br />
The Reserve Bank’s CFR (Core Funding<br />
Ratio) was cut in April 2020 from 75%<br />
to 50% in order to support banks lending<br />
during the economic uncertainty caused<br />
by Covid. On 1 January <strong>2022</strong> this limit<br />
was returned to 75% - the issue is that the<br />
tap, often due to Reserve Banks decisions,<br />
seems to either be turned on fully or turned<br />
off completely, rarely having times where<br />
there is a nice steady flow of finance causing<br />
neither a flood nor a drought.<br />
Talking to a particular developer last<br />
week, banks are not looking to lend on<br />
many development projects and second<br />
tier lending at 12% plus, make many projects<br />
unviable. They have resorted to sourcing<br />
private funders at around 8% - not<br />
ideal, but they can make projects work at<br />
this level. Once a project is completed, first<br />
tier bank lenders come back into play.<br />
To be clear, many of the parties with<br />
these issues are not new to the market<br />
or fly by nighters. Hamilton remains<br />
extremely fortunate to have an extensive<br />
pipeline of development at various stages<br />
of actual construction and well underway,<br />
as often its ‘proposed’ developments that<br />
are delayed or put on hold.<br />
They may say they are lending, but to<br />
many it obviously doesn’t feel like it –<br />
for our financial institutions to consistently<br />
back their development horses for<br />
the entire race – particularly the stayers<br />
with proven or reliable track records. Different<br />
if it’s a horse on its first outing,<br />
with no pedigree or previous race experience.<br />
Every horse will have a bad outing or<br />
two, but the most successful trainers and<br />
owners know a good thing when they<br />
see it.<br />
The challenges we have are<br />
unlikely to be long lasting and financial<br />
institutions will want to retain<br />
these clients as the market returns<br />
– Hamilton and the <strong>Waikato</strong> have<br />
strong fundamentals for the future,<br />
so the risk seems minimal. We<br />
are increasingly a desirable place<br />
to live and to conduct business,<br />
we have strong geographic benefits<br />
within the golden triangle and<br />
the likelihood of a major disaster is<br />
negligible.<br />
NAI Harcourts Hamilton<br />
Monarch Commercial Ltd MREINZ Licensed<br />
Agent REAA 2008<br />
Cnr Victoria & London Streets, HAMILTON<br />
07 850 5252 | hamilton@naiharcourts.co.nz<br />
www.naiharcourts.co.nz