Waikato Business News October/November 2022

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