Waikato Business News | December 1, 2023

8 WAIKATO BUSINESS NEWS
DECEMBER 2023
Where We Are In The
Cycle? What Does 2024
Hold In Store For Us ?
As I write this, there seems
to be agreement on policy,
so hopefully we are not
far away from a new
government being formed – at long
last. Since the election we have seen
greater optimism from the business
community and possibly light at the
end of the long tunnel we have been in
– hopefully not as someone suggested
to me last week, that light is actually a
train coming towards us.
There seems no doubt that we are
currently bouncing along the bottom
of the market. While we don’t know
how long we will be here, one thing is
for sure, those that take opportunities
presented to them now, will in the
long term look like the rock stars that
did so after the GFC – Matt Stark is one
of those.
Commercial and industrial investors
and owner occupiers only seem to
have two issues when it comes to
purchasing property at the moment -
that is access to capital and the cost of
capital.
While yields have risen significantly
since the frenzied peak of the market
in 2021/22, buyers have pulled back,
showing a reluctance to act. History
would suggest that being counter
cyclical around purchasing decisions,
remains a prudent and successful
strategy, as there is currently far
less competition when it comes to
purchasing.
When will the bell toll ?
At some stage during 2024 it seems
highly likely that the Reserve Bank
will cut the OCR or allude to an
imminent cut – at exactly that point
in time, confidence will start to return
to the market, as will an abundance
of purchasers and the competition
between them. Once the bell has
tolled, its too late if you were wanting
to purchase at the bottom of the
market - its now rising.
In this column the same time last
year, I suggested that we would expect
the OCR rises to have peaked by now
and even the possibility of impending
cuts ahead. That seems about
right? It’s hard to see any sound
reasoning behind the Reserve
Bank raising the OCR further,
as banks have already raised
their lending and deposit rates
recently, even though
they are forecasting
that the Reserve
Bank will start to
cut the OCR late (or
possibly mid) 2024.
ADVERTORIAL
Crystal Ball
What will happen to commercial
property in Hamilton and the
Waikato?
• Vacancy rates have slowly started
to increase. At this stage we are not
expecting this to be significant, but
some tenants are under pressure.
• Secondary grade assets have seen a
greater drift in their yields, but they
are also the ones that experience
the greatest uplift when we
experience a rising market.
• With commercial lending rates
generally now being around 9% and
with tough lending criteria from
banks, purchasers that can borrow
will have been well tested.
Those hoping that the historically
low yields we saw in late 2021 and
into early 2022 will return, are in my
opinion living in a utopian world – as
much I would like to see them return,
they just won’t. The OCR levels below
1% and availability of capital that we
saw, were the fundamental reason for
this.
My advice for 2024, but starting right
now:
• If you are considering purchasing,
whether you are an owner occupier
or investor, now is absolutely the
time. Take action today with a view
to the future.
• If the deal works in today’s high
interest rate environment, then it’s
only going to get better as interest
rates start to fall in due course.
• Set your list of criteria and then
get active – those that keep
changing their criteria, invariably
shift the goal posts, often ending
up doing nothing, having missed
the opportunity. Quality assets are
always quality assets in the long
term.
• Before you do anything, talk to
your financier or mortgage broker.
Cash is king again and we have seen
some recent sales that demonstrate
the value of this commodity.
• Once the bell tolls around interest
rate cuts, greater competition from
purchasers will absolutely return to
the market.
So, enjoy your break with friends
and family over Christmas and New
Years, for it’s been a long year, but
one that has gone quickly.
2024 will be the year of
opportunity. Hamilton and the
Waikato continues to come
into its own, being well
set up to weather any
storm, with a broad
and robust economy.
In the business
of conservation
Two projects making
news in the Waikato
are concentrating on
waterways.
In Waipā a project
to create an ecological
corridor between Sanctuary
Mountain Maungatautari
and Mt Pirongia has
celebrated its second
anniversary.
The Taiea te Taiao project
will link the two maunga -
40km apart - by planting
along the Mangapiko Stream
and its tributaries, on farms
and other properties.
More than 200,000 plants
have been added to the
corridor. Nine kilometres of
waterways have been fenced
and native trees planted
alongside.
“Beautifying the
Mangapiko Stream will
enhance its mana,” Poto
Davies of Ngāti Koroki
Kahukura said.
“The stream is the veins of
the land, and the whenua is
important to us all.”
Waipā district councillor
Clare St Pierre, co-chair
of the Maungatautari to
Pirongia Ecological Corridor
Incorporated Society, says
an environment is being
provided for “iconic” species
so people can see them on
their back doorstep.
The Ministry for the
Environment provides
funding through the
Freshwater Initiatives Fund
for two employees, and NZ
Landcare Trust coordinates
the project.
Further north Tāngaro
Tuia te Ora, the Endangered
Species Foundation, has
named Tawera Nikau
and Emma Giesen as new
co-chairs.
Giesen brings a wealth of
Former Sanctuary Mountain
Maungatautari chief Phil Lyons has taken
on the role of national manager for Trees for
Survival.
And at Maungatautari, Helen Somerville
is into her third month in the new role of
general manager, having succeeded Andrew
Peckham.
Trees for Survival has planted more than
two million native plants since the charitable
trust was established in 1991.
Lyons said it was wonderful to see more
people choosing to give the gift of a tree
or a charitable donation for birthdays,
anniversaries, or Christmas in lieu of a more
traditional gift.
experience in environmental
advocacy and a track record
of fostering tree planting
initiatives across Aotearoa.
Nikau, Waikato-Tainui
and a former Kiwi, is
working to wipe out koi carp
from north Waikato lakes.
The introduced pest
was initially recorded
in the Waikato in 1983 –
today tonnes of koi are
removed from the river by
bow hunters in an annual
competition.
At the start of November
the 33rd World Koi Classic
harvested 4.11 tonnes of koi
in two days.
Nikau, also chair of Te
Riu o Waikato Board, said
the fish would be processed
into petfood, fish bait and
fertiliser.
The focus of Tāngaro
Tuia te Ora is to strengthen
partnerships with Māori
organisations, communities,
and leaders who are
dedicated to biodiversity
restoration.
“We are entering a new era
of biodiversity restoration,”
general manager Natalie
Jessup says.
She also paid tribute to
outgoing chair Stu Muir
“Stu has been instrumental
in strengthening our
position as a respected
Emma Giesen
Tawera Nikau
Poto Davies
Changes at the top
A replacement barge for the Tamahere 94
barge used by the Waikato Regional Council
Construction is expected to be heading south
this time next year.
Construction of the new self-propelled
vessel, overseen by Marine Management
Ltd, started at Heron Ship Repair Limited in
Whangarei in May.
The council received $1.92 million
from Kānoa – the Regional Economic
Development and Investment Unit’s Covid
“ The stream
is the veins of
the land, and
the whenua is
important to
us all
organisation through his
leadership and emphasis
on indigenous perspectives
and Māori-led projects for
biodiversity,” she said.
Every year, Trees for Survival plants over
100,000 native plants, in collaboration with
students, landowners, schools, communities
and corporate partners.
The plants are grown and nurtured by
students.
Meanwhile, Somerville reported last
week that three of the kākāpō brought up
to Maungatautari from Fiordland had been
returned – after some of the flightless birds
managed to get out of the fenced enclosure.
The challenges were not entirely unexpected
– the department of conservation anticipated
having to jump some hurdles of its own as
it works with iwi and Sanctury Mountain to
eventually establish a breeding population.
Barge work continues
19 Response and Recovery Fund - towards
the project.
The Tamahere 94 was used by the council
for 50 years as a working platform on the
Waikato and Waipā rivers.
The new vessel will undertake work
primarily to provide for the stability and
capacity of river channels in the lower
reaches of the Waikato and Waipā rivers,
as well as being available for lease to other
parties.