June 2023 - Bay of Plenty Business News

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8 BAY OF PLENTY BUSINESS NEWS June 2023 WEALTH BUILDERS 2023 For advice in building wealth with property investment, talk to the best Simon Short, Regional Manager – Property Brokers Bay of Plenty and South Waikato Ian Morgan, Rural Specialist – Property Brokers For property investors interested in optimising their investments, the current economic environment is dishing up both challenges and opportunities in equal order. The specialist Property Brokers team has a wealth of knowledge and advice which can be incredibly helpful for property investors right now. We spoke to Property Brokers’ Bay of Plenty and South Waikato regional manager Simon Short for the December 2022 Thought Leaders feature. At that time, we asked Simon, “Where is the real estate industry headed in 2023?” His response at the time was very direct: “With interest rates now elevating, as expected, to offset inflation, I sense, like many, next year will be a year of further pricing correction and calibration.” He felt interest rates would have the largest bearing on buyer confidence, stating, “Affordability is now a significant factor with capital gains no longer as prevalent.” Fast-forward six months to June 2023, and his read of the anticipated 2023 market was obviously pretty well ‘spot on’. Property Brokers’ story Property Brokers has grown rapidly from humble provincial beginnings to now be New Zealand’s largest, fastest-growing provincial real estate brand. As one of Heartland New Zealand’s largest real estate businesses, they list and sell an enormous amount of provincial property, whether residential, rural, lifestyle, commercial or industrial. Bay of Plenty Trends 2023 Property Brokers now has offices across the Bay of Plenty in Whakatane, Rotorua, Te Puke, Papamoa, Tauranga, Tauriko, and Te Puna. The company has established seven offices across the Bay of Plenty region in the last three-and-a-half years. “We have great people who care about adding as much value as possible for our clients. Our number one objective is to give all Bay of Plenty property owners the very best service we have to offer.” Simon believes there is a real awareness of Property Brokers across the Bay of Plenty now. “We envisage that will continue as more people come to appreciate the strength we offer right across the nation. We are not franchised; therefore, our emphasis is always on connection and adding as much value as we can to benefit those around us. Rural property perspectives We asked Property Brokers’ Bay of Plenty and Northland rural manager Ian Morgan about the outlook for rural investors. He feels Property Brokers offers rural buyers and sellers a real advantage – “Property Brokers’ rural team brings a wealth of experience and understanding to the information required to make an informed decision to any farming investments.” His advice to those investors buying and those selling in the sector: “It is always about timing, and presently the Agri sector looks a very attractive proposition with quality produce diminishing globally. But rural is a long game, and the investor needs to be clear about this.” Regarding the challenges and opportunities for rural investors in the year ahead: “Although the immediate challenges, particularly the weather, have been uncontrollable, and that has and will continue to have a significant impact in terms of production in the near future, opportunities will be plenty, and the Agri sector is well poised to deliver results in the future. AIan Copeman, Commercial Specialist – Property Brokers We’re a family of lateral thinkers, industry specialists and playmakers who know that commercial sales and leases are the result of helping businesses and individuals succeed. Commercial property investment potential When asked this week, “Why is Property Brokers a great choice for commercial property investors interested in optimising their investments today,” Waikato and Bay of Plenty commercial manager Alan Copeman was immediately forthcoming: “We’re a family of lateral thinkers, industry specialists and playmakers who know that commercial sales and leases are the result of helping businesses and individuals succeed. Our market intelligence and regional knowledge translate into real results for our clients.” His key advice to investors: Ensure that you allow for interest rate movements and that you are not over-committing in borrowing. Alan believes interest rates will continue to put pressure on the yields investors are looking for. He anticipates that as building costs start to Philip Hunt, Industrial Specialist – Property Brokers level, this will improve the situation in the new build space, ensuring an easing of the upward pressures on rental rates. Industrial property investment update Philip Hunt, the company’s commercial and industrial consultant in Tauranga’s fastgrowing Tauriko industrial area, is adamant that although commercial retail is slow – a bi-product of changing consumer habits resulting from lockdowns and increased online shopping volumes – industrial remains the darling of the sectors. This can be evidenced by the doubling in size of his Tauriko team in the last year. “We’re getting 4-5 tenancy enquiries daily now that Tauriko can offer real economies of scale. Businesses are desperate to relocate to Tauriko now the roading and infrastructure are in place,” he says. “I’m loving being here – for me, it’s about the relationships, not the transactions. I just want to look after people.” Philip says that although there is limited support for investors from financial institutions unless they are well established, tenancy enquiries are booming at the moment. His advice to prospective tenants is, “Don’t take too long to commit – you risk missing out!” He estimates 60% of his clients are Portrelated businesses. He praises the Port of Tauranga for its foresight: “They have enabled us to build a bubble of positivity.” Plenty of PB in BOP Plenty of experience Plenty of locations Plenty of people REINZ Plenty of awards Our family business has provided clients with full-service real estate solutions for over 36 years. We have seven offices throughout the Bay of Plenty and are proud to call a further 87 regional locations home. Our specialist team of more than 880 strong work together to get you the very best result because you deserve nothing less. Over the years, we've received over nineteen REINZ awards and are consistently in the top 1% of agencies year after year. Whether you’re looking to sell your property, buy a new one or join our exceptional team, get in touch - we’d love to be a part of your next step. Call us on 0800 367 5263 or visit pb.co.nz Property Brokers Ltd Licensed REAA 2008 | PB068097
WEALTH BUILDERS 2023 June 2023 BAY OF PLENTY BUSINESS NEWS 9 Is this the end of OCR rises? By John Carran, Director, Wealth Research at Jarden. John is part of the team supporting Jarden’s Wealth Management Advisors in Tauranga. In its monetary policy announcement last month, the Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 0.25% to 5.5%. To ensure inflation is curbed, the RBNZ expects the OCR to remain at 5.5% until the September quarter of 2024. The decision to raise the OCR was broadly in line with most economists’ expectations. However, after the previous week’s Budget and recent signs of surging net inward migration, market expectations had reflected the probability of a chunkier 0.5% OCR increase. In addition, many economists expected the RBNZ to signal further OCR rises in the future. Consequently, financial markets were surprised by the less aggressive OCR announcement, which caused short-term and long-term interest rates to fall materially immediately afterwards. The New Zealand dollar also fell significantly against major currencies. Things moving in the right direction In making the OCR decision, the RBNZ Monetary Policy Committee (MPC) expressed its view that inflation is likely to continue declining from here. While the MPC sees core inflation pressures remaining until capacity constraints ease further, it acknowledges there are signs labour shortages are easing and job vacancies are declining. In addition, the MPC notes consumer spending and residential construction activity are slowing down. Businesses have recently reported a lack of demand, rather than labour shortages, is now the main constraint on business activity. The RBNZ still see the economy slipping into recession later this year, but is expected to be milder than it previously predicted. It sees the unemployment rate peaking at 5.4% in the December quarter of 2024, which is lower than the peak it previously forecast. The RBNZ’s outlook remains softer than the Treasury forecast in the Budget. Although the Treasury see a weaker economy ahead it expects a recession to be avoided. After this year’s Budget, there was commentary that its near-term stimulatory effect on the economy may sway the MPC towards a higher OCR this year. Surging net inward migration was also seen as potentially leading the MPC along a tighter monetary policy path. However, the MPC downplayed these influences for several reasons. Net inward migration has risen rapidly in recent months, running at an annualised pace of around 130,000 in the three months to March. However, the MPC expects the surge in immigration to be temporary as it reflects the recent easing of immigration rules to alleviate labour shortages in some areas. Migration is something the RBNZ will watch carefully, as it notes the extent and impact of future migration on the economy and inflation pressures is uncertain. While the Budget adds stimulus to the economy this year, declining surpluses over the following three years mean the fiscal position will likely be contractionary for the economy over that period.” The MPC also noted that, while the Budget adds stimulus to the economy this year, declining surpluses over the following three years mean the fiscal position will likely be contractionary for the economy over that period. Another matter on the MPC’s radar is the potential impact of repair and rebuilding after the severe weather earlier this year in the North Island. The MPC noted that spending would occur over several years, which means pressures on resources would be spread over time. Overall government spending is expected to decline in inflation-adjusted terms and in proportion to the economy, which should help to dampen inflation Therefore, the MPC is confident that with interest rates remaining at a restrictive level for some time, consumer price inflation will return to within its target range of 1-3% per annum, while supporting maximum sustainable employment. The peak OCR has arrived Last month’s MPS and OCR decision signal the RBNZ is most likely done with raising the OCR in this cycle. It will be in “watch and wait” mode as it observes the lagged impact on the economy and inflation of the incredibly rapid OCR increases over the past 19 months. While the RBNZ do not see the need for OCR cuts until the second half of 2024, we think a slowing economy and fading inflation may persuade the MPC to decrease the OCR as early as the first quarter of 2024. For mortgage holders who are suffering from the rapid lifts in their interest costs, the RBNZ’s decision to rule out further OCR increases will provide some respite. Further mortgage relief, particularly for fixed term mortgages, may arrive toward the end of this year if inflation continues its downward trend as the RBNZ predicts. Disclaimer: John Carran is Director, Wealth Research at Jarden. The information and commentary in this article are provided for general information purposes only. It reflects views and research available at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. It is not to be relied upon as a basis for making any investment decision. Please seek specific investment advice before making any investment decision or taking any action. Jarden Securities Limited is an NZX Firm. A financial advice provider disclosure statement is available free of charge at https:// www.jarden.co.nz/our-services/wealth-management/ financial-advice-provider-disclosure-statement Strong investment decisions built on trust Jarden welcomes two new local wealth management experts to Tauranga, Sarah Ashby and Simon Bradley. Sarah and Simon will work with you to guide you toward your long term financial goals. Contact Sarah Ashby: +64 27 211 0760 Contact Simon Bradley: +64 27 427 3899 Or visit www.jarden.co.nz Jarden Securities Limited is an NZX Firm. Jarden Financial Advice Provider Disclosure statement is publicly available at www.Jarden.co.nz. Jarden is not a registered bank in New Zealand.
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Page 3 and 4: COVER STORY June 2023 BAY OF PLENTY
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Page 7: WEALTH BUILDERS 2023 Protecting wea

June 2023 - Bay of Plenty Business News

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