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Export led property boom for Hawke’s Bay

A “surging” Hawke’s Bay’s economy is reflected by widespread commercial-industrial development activity, says Turley & Co’s latest Property Market Report for Hawke’s Bay.

The valuers and property strategist’s comprehensive report to June 30 2017 is split into four sections covering the office, industrial and retail sectors plus a wider macro report. The macro report says the first six months of 2017 saw good levels of activity off the back of a “humming” 2016, describing it as: “Hawke’s Bay’s most buoyant commercial property sales period since pre-GFC”.

“Hawke’s Bay’s economic conditions on many fronts are surging,” the report says.

It lists dozens of multi-million-dollar developments and sales, comparing yields nationally with Hawke's Bay's "buoyant" market across all sectors.

The largest development is a planned $100million new berthing facility at Napier Port “in response to record-setting export volumes led by high growth in local viticulture, horticulture and forestry”.

“There is a bow wave of optimism off-the-back-of booming primary and export industries and tourism. Napier Port cargo was expected to increase 49 per cent by 2026 and is reportedly tracking six years ahead of projections. Rapid expansion of pipfruit and viticulture insulated the province from nationally poor dairy performances (now rebounding).”

Commercial-Industrial land values are generally tracking upwards.

Prime industrial properties are keenly contested as shown by sales last year of BOC Gas Napier at 6 per cent and PBT Transport 6.25 per cent yields. Occupancy at the better end of the market has improved and major developments are “a tell-tale sign of an expanding local economy”. Rents however, apart from new builds, have often been flat but upward momentum is expected.

Seismic performance (NBS rating) has been a lead factor in considerable commercial property activity since 2012 and the reason behind major activity is a tenant reshuffle in the office sector.

The growth of Ahuriri for offices continues at the partial expense of Napier’s CBD, the latest example being the Tech Collective anchored by local telecommunications company NOW and NZX-listed Xero in a former wool store. This is however “great for Hawke’s Bay” Pat Turley says. Havelock North continued to offer an offices alternative to Hastings, as evidenced by The Exchange and a planned Tech Collective.

CBD retail vacancy is improved in Napier and Hastings but the fringes are “anaemic”, partially due to the popularity of big box retail. Hawke’s Bay led the country for retail spending in the first quarter of 2017 according to Paymark figures.

Provided there are no major external shocks the report says the stars continue to be aligned for the Hawke’s Bay’s economy “that will likely continue to ramp for the foreseeable future”.

While there remains room for growth Turley& Co’s 25th biannual report says it is possible the Hawke’s Bay market is at its commercial properties valuation peak, or approaching it.

“It seems likely that 2017 could be overall another ripper for New Zealand and Hawke’s Bay commercial-industrial property, however, with heightened risks that could conspire to spoil the party and maybe at short notice.”

Associate director Kurt Richards said: "This is possibly typical of a market, at or nearing its peak."

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