Population Growth and Growth in Property Values

[lakedaemonian]

quote:Originally posted by rmbbrave

Business after baby-boomers

The economy's health depends largely on medium-sized businesses passing into the hands of young and ambitious new owners and managers when their baby-boomer founders retire, says the ANZ National Bank.

The bank, which yesterday released its first annual survey of mid-sized or larger privately owned businesses, said the boomers' approaching retirement could have a profound effect on the sector.

ANZ National Bank chief executive Graham Hodges said the demographic shift, which would see a sharp jump in the retirement age population between 2006 and 2016, was often mentioned in relation to superannuation and savings issues.

"There has been less discussion around what that change in the demographic cohorts is going to do to business. This survey gives a feel for what's going on in the minds of the sector."

ANZ National corporate and commercial banking managing director Nigel Williams said the bank's Privately Owned Business Barometer found that just under half of main business owners of larger, privately owned companies were looking to retire over the next five years, but only about 10 per cent had formal plans for how they were going to get out of their businesses.

"If owners don't manage this well, the inherent wealth in their business might be a lot less when they come to exit than what they currently think it is," said Hodges.

Owners might choose to stay longer in their businesses but, having achieved a degree of comfort, would tend to be less aggressive in their investment and expansion plans and would perhaps focus on conserving the value of their business.

Williams said ANZ National believed owners should consider how to release capital or reduce their involvement while allowing a new group of management or owners to take the company to the next level.

"It is incredibly important that the next set of owners and management of these companies are successful in growing them.

"If they don't then we'll compromise New Zealand's growth," said Williams.

"We won't have these mid-sized companies become big companies."

The numbers

New Zealand's medium-sized businesses:

* 3500 firms employing 30,000 people with annual revenues of about $11 billion.

* 89 per cent are more than 10 years old, 35 per cent are more than 30 years old.

* 66 per cent of shareholders are over 50, one third are over 60.

This is something I hadn't thought of !

I'm pretty sure the value of property and shares will fall as BB's sell those assest to fund their retirement but this articlesays that the value of privately owned businesses will fall too.

My fathers neighbour runs a wedding dress shop and has been trying to sell it for years so he can retire. Unfortunately no one will buy it from him for a good price.

You bring up a VERY important point.

I've been working on this myself for the last few years, selling up one business late last year while the valuation was high.

One important consideration is that banks and commercial lenders will have to become comfortable with lending against cash flow as opposed to just assets.

Younger folks, if they have any hope of buying out the baby boomer businesses, will need to have lenders willing to look at sustainable businesses in a different light.

Traditional asset based commercial lending will have to shift somewhat towards cash flow based lending(because young folks are broke) if there is any hope of unlocking boomer capital tied up in small/medium sized businesses.

Otherwise, the intangible value of small/medium sized businesses will be destroyed.....hurting boomers, but potentially making for great opportunities for those cashed up

NZ is STARTING to see cash flow based lending with major franchises, but it will ta

[rmbbrave]

If you think immigrant are going to hold the price of your investment properties up - think agian. There is lots of competition now for quality immigrants from countries with alot more to offer than NZ.

NZ loser in international race for skilled migrants

By Lincoln Tan

When I went to Taiwan last year, I met a few men who called themselves ex-Kiwis.

In Taiwan, they were highly qualified in their fields, and were citizens of both New Zealand and Taiwan. But they told me that when they were in New Zealand, they struggled to find employment. Without a means to earn a living, they had no choice but to return to Taiwan.

Then, I shuddered at the thought of moving back to my country of origin. But a week back in Singapore and looking at the opportunities around me, I am very tempted to do just that.

A far cry from the country in financial crisis that I left for New Zealand, Singapore is now booming. Business opportunities and jobs are plentiful. New developments are happening everywhere - two big casinos, a Universal Studios theme park and even a giant ferris wheel.

Moves to attract more overseas investment dollars have been intensified and the feeling is the economy is set to move rapidly upwards. To help fuel its economic growth, Singapore has set its sights on bringing in skilled migrants and investors - setting a target to grow its population by two million.

This move would pose a challenge to New Zealand in the face of competition for skilled immigrants, Minister for Immigration David Cunliffe said last week.

Singapore, with a population and living standards similar to our own, had announced plans to increase its population to 6.5 million by targeting skilled migrants from countries including New Zealand, he said.

That is the kind of challenge we are up against. But is New Zealand's response to the challenge of overhauling its immigration policy and laws enough to lift it to meet this global challenge to draw the best and brightest to our shores?

Changes to the investor and skilled migrant categories for entering New Zealand still carry the same mark of arrogance. The focus is mainly on what the immigrant can give to New Zealand and not vice versa - a stark contrast to Singapore's drive, where the focus is on what the country has to offer to investors and skilled migrants.

New Zealand and Singapore differ greatly in the way they view immigration and they way they treat their investor and skilled immigrants. For example, Singapore values international work experience. Singapore employers see overseas work experience as an asset. Such experiences count for nothing in New Zealand where most employers continue to view Kiwi experience as the only skill that would make someone employable.

So as employment doors continue to get slammed on skilled immigrants here, many are finding new opportunities elsewhere where they feel valued and able to contribute. In a trip to Jakarta last week, I met a Dutch engineer with New Zealand residency who moved there because he couldn't find employment in his field back in Auckland.

While New Zealand has immigration requirements such as a high level of English to deter immigrants from Asia, Singapore has been eyeing the investment dollars of the newly affluent Chinese, Indians and other Asians.

The Singapore Government has been busy forming alliances with its ethnic communities to help break into new markets and promote ties with their home countries. The Straits Times last week reported how Singapore was working with the Arab Association helping with a push into the Middle East and to help promote the perception the country was Arab-friendly.

In New Zealand, ethnic community groups are often sidelined, and politician involvement is often limited to attending cultural events and delivering speeches. There is no working partnership to push New Zealand abroad.

Looking at the multi-pronged approaches to wooing immigrants and investors made by a country like Singapore has left me wondering if a change of policy alone would be sufficient to mak

[Bel]

Great, singapore can look after it's citizens by opening it's door to foreign nationals who want what they've got the easy way. Then in a few decades they can pass one child only laws or some such since there won't be any land left for its own citizens to raise families.

I love short term views. Protecting the lifestyles of it's citizens is obviously not what the role of the Government, rather it's better to earn extra $$$

[The Doctor]

sounds like buying a 'holiday home' in Otara...who/why would you?

[moe]

quote:Originally posted by aspex

Watch for the Asian migrants who have their NZ citizenship,go off to Oz where they can live forever without paying any tax on their NZ income (except for perhaps 2% held back by IRD)
This is totally tax free in Australia so $2m at 7.5% is $150k less a nominal $3k tax.
That should relieve the housing market once it starts.

Is this on any NZ income Aspex,eg: rental income? So if you are a NZ citizen but residing in OZ(and are an australian for tax purposes) you don't pay any tax on income generated in NZ?

Thanks

Moe

[rmbbrave]

Housing now a tenant's market
5:00AM Sunday June 17, 2007
By Rebecca Lewis

Rents are failing to keep pace with surging Auckland property prices, creating fears of both rent rises and of landlords not bothering to invest in rental properties.

While property prices in the city increased 17 per cent in the 12 months to April, Crockers' latest market research shows rents for two- and three-bedroom Auckland properties rose only 4 per cent in the same period.

"The yields are decreasing - it is a serious problem," Crockers marketing manager Karen Coleman said. "More and more people are needing to rent, but there are fewer people who are able to buy in order to rent - at some point, rents may have to dramatically increase."

Serial investor and property guru Olly Newland said investors had less of an incentive to buy rental properties.

"You would only be getting about a 3 per cent return on value, which is just unacceptable.

"If people could pay double the amount of rent, it would be worth it for everyone, but of course, most people can't afford to do that."

Experts say it is unrealistic to expect rental values to keep up with property prices.

http://www.nzherald.co.nz/section/1/...ectid=10446200

[lakeside]

All in the news today that Micheal Cullen and IRD want to stop investors claiming back rental losses on their salary.

This could have a big effect on the housing market. There are a lot of people been doing this - especially on new propertys with depreciation but also older yield ones.

The question is how long will it take to find another way around whatever legislation they come up with. Also if Labour need National to pass it.

[rmbbrave]

Speculators on the prowl

By Anne Gibson

Speculators are hunting Auckland's urban fringes for landbanking deals. Like bounty-hunters riding the boundaries, groups of millionaires and wealthy migrants are looking to lock away land on the city's rural outskirts for big gains.

In one case, landbankers are being enticed to buy a large block of Papakura land being marketed as "strategic".

The rambling rural block on Auckland's outskirts lies on the rural side of the metropolitan urban limit that ringfences the city from the countryside.

"Rarely does a significant land holding of 35ha which borders an industrial estate become available for sale," said agent Shane Snijder of Bayleys, who is selling the land owned by two brothers. A third brother is selling an adjoining 15ha.

Tenders closed on Wednesday.

"Don't miss this land bank opportunity," Mr Snijder said in advertising the property.

Rex Gazzard of Bayleys Papakura said landbanking was rampant around Auckland's outskirts and savvy investors could easily double their money in a couple of years if they bought the right blocks.

This week's parliamentary inquiry into housing affordability heard a clamour of submissions pleading for urban limits to be lifted and more sections freed up for subdivision around the fast-growing Auckland.

Demographia, which publishes an annual housing affordability survey, the Property Council, which represents investors, and the Master Builders Federation all called for urban boundaries to be lifted.

Some criticised the Auckland Regional Council for restricting land supply.

Because land is the single most expensive component in housing, they all argued that freeing up more sections would help ease the country's housing crisis.

But the ARC's submission counterattacked, hitting out at those wanting Auckland to sprawl into rural-zoned areas.

The city had more than enough urban land and sensitive rural and coastal areas must be protected, it said.

Mr Gazzard said landbankers knew it was possible to make a fortune by buying strategic blocks on Auckland's perimeter.

Wealthy migrants from China, Taiwan and Korea were particularly active, hunting for those opportunities, he said.

"But they don't like tenders. They prefer to negotiate one-to-one rather than compete against others," Mr Gazzard said.

Wealthy investors such as millionaire Hugh Green, on the National Business Review Rich List at $190 million, own more than 1000ha around Auckland's outskirts but he bought it as farmland three decades ago.

Mr Gazzard said rural land on the city's southern outskirts went for around $16,000 a hectare but land-bankers were offering double or more in many cases because they knew the potential gains were huge.

Wealthy South Aucklanders - particularly the Urquhart and Yates families - held strategic blocks but these families were third and fourth-generation land owners, he said.

Pukekohe farmers could also be regarded as landbankers.

"Farmers are landbankers in a way," Mr Gazzard said.

Rick Martin, the North Shore developer and property owner, said he could not afford to landbank because land prices and interest rates were so high.

Martin has large holdings at Albany, Silverdale and Waimauku.

GIVE ME LAND

* Auckland has 559sq km or 55,933ha of land within its metropolitan urban limits.

* Auckland Regional Council says this is enough for 16 to 25 years of demand.

* It estimates 44 years of capacity outside the limits to meet demand for rural lifestyle lots.

* Since 2001, consents were granted for 52,000 new houses within the city's limits.

* That was 60 per cent up on the number of new housing consents from 1991 to 1996.

* Wealthy landbankers are scouting the city's fringes to buy blocks for big profits.

* They are counting on councils expanding the limits and re-zoning the land for houses.

NZ's population is expected to go into decline from around 2046 so the 44 years of capacity for lifestyle blocks should be more than enough.

16-25 years of capaci

[rmbbrave]

Auckland house prices overtake Australia's big cities'
5:00AM Sunday June 24, 2007
By Julie Jacobson

Median house prices in Auckland are now outstripping those in all of Australia's major cities, except Sydney and Perth.

http://www.nzherald.co.nz/section/8/...ectid=10447536

Averaging it out

Australian property prices (A$):

Adelaide$302,000
Brisbane$345,000
Canberra$395,000
Hobart$294,000
Melbourne$380,000
Perth$455,000
Sydney$516,000

Auckland property prices (NZ$):

North Shore$535,000
Waitakere$378,113
Manukau$433,250
Auckland City$492,000
Papakura$317,500

[rmbbrave]

NZ house prices are a bubble waiting to burst.

The Ockers have higher wages, better weather and cheaper houses. And NZers can move there to take advantage of these.

If you are thinking with your wallet why stay in NZ?