Talk of a recession, construction costs going up, and no
sign of the cost-of-living plateauing… it seems as though it's all doom and
gloom within the economy at the moment. The good news for Commercial investors
is that the Commercial sector doesn't have the peaks and troughs like the
residential sector. While we may be seeing a dip in the higher priced
transactions (those over $10,000,000), the mid-sized well-leased properties in
good locations are still in demand, with many savvy Commercial investors dusting
off the chequebook and getting ready to take advantage of the bargains that
await.
With tourism returning to how it previously was and people
becoming less risk-averse, developments in the regions are booming. Developers
who have previously stuck to the big cities are finding that the returns they
can achieve in the provinces make the regions much more attractive.
Lower land
prices, a ready labour force, and substantial population growth make a
provincial investment not only financially attractive but also less risky.
In September, Property Brokers sold the old Palmerston North
Post Office to Auckland-based developers Safari Group NZ. This derelict
heritage building had sat vacant for many years, and Safari Group plans to
restore the building into a five-story, 86-room, central city hotel and health
spa complete with retailing, conference facilities, and a gym. Safari Group
director Damien Taylor said, "the company was excited to bring a
world-class hotel brand to the city centre. Palmerston North has long been on
our radar, and the right opportunity has presented itself."
The $50 million project has been welcomed by the Palmerston
North City Council and the public alike, with Palmerston North City Council
Chief Planning Officer David Murphy stating, "We know our residents will
be thrilled with this news. This development will play a key role in our city
centre transformation and creating our vision for the city centre where people
want to live, work and play."
Construction is set to start in late 2023 with a completion
date of mid-2025. The Manawatu is also buzzing over plans for a substantial
industrial park to be built close to Palmerston North airport.
A commissioners' hearing into plans by KiwiRail to designate
land for a 177-hectare development to build massive rail yards, container
handling and freight forwarding facilities on the outskirts of Palmerston North
recently concluded, bringing both excitement and uncertainty for those affected
by the planned development. The $40 million investment from the Government's
Provincial Growth Fund for the planning, designation and acquisition of land
has meant that the dream will become a reality sooner rather than later. Mayor
Grant Smith said it "would unlock other opportunities, attracting more
distribution and logistics companies to the region, which would need support
from other trades and services".
KiwiRail group chief executive Greg Miller believes the
centre could attract $2b to $4b of additional investment to the region. At the
same time, the future employment numbers could see up to 2000 people working
on-site.
With the KiwiRail Freight Hub now a real possibility,
national and international companies are snapping up available land in an
attempt to landbank for the future, pushing land prices up higher and yields
further south.
