Archive | October 2011

THE IRISH ARE COMING!

While overall net migration figures aren’t too flash right now, with major outflows still heading across the Tasman and incoming numbers from North America, South Africa, Asia and Europe slow…there has been a huge increase in immigration applications and approvals from Irish citizens.

HaereMai - Welcome to NZ

Seems the collapse of the hugely subsidised economic growth of the past decade or so which has led to unemployment rates of over 14% is driving highly qualified people to depart. NZ has seen increases of over 300% in the number of Irish migrant arrivals and this seems likely  to continue for some time ahead.

TREASURY OPENS BOOKS

Treasury opens the country’s books to all parties and the public

As is general practice now, before elections, Treasury opens the country’s books to all parties and the public so party policy can be based around reality. Here’s a quick summary from our friends at ANZ…

KEY POINTS

  • Treasury’s latest forecasts did not contain much by way of surprises.  The growth profile is broadly similar to the Budget forecasts, as is the expectation of a return to surplus by 2014/15.
  • The battleground to achieve a surplus by that date will be fought on two levels.  First, whether real GDP growth can average 2.9 percent over the next five years as Treasury forecasts.  Historically, this has been easy to achieve, but more questionable in a deleveraging and bumpy global environment.  The earthquake rebuild will add to growth, but if supply-side capacity is not what it was, then this impetus will displace growth in other sectors.  Second, whether sustained government spending restraint can be achieved in an ongoing manner.  Further restraint in some areas will get into diminishing returns.
  • These suggest a return to surplus could potentially be delayed by a year.  In the overall scheme of things, we do not think this matters much with the spirit of fiscal austerity more critical.
  • No matter who wins the election, all political parties are in a fiscal straitjacket for the next five years.
  • We see greater coordination between fiscal policy and monetary policy over the coming years, which will assist the RBNZ in keeping interest rates lower than would otherwise be the case.

SUBSIDIES CALLED FOR BY CONSTRUCTION INDUSTRY

Did you see the research paper put to the Govt by the construction industry group at the weekend? Warning the Govt that unless they manufactured some jobs for their sector post Chch rebuild, there would be a collapse in the construction industry and that would be bad for the economy in 5-6 years.

Is that a subsidy call?  At the same time we ought to be talking about SMPs, Export Subsidies and tax incentives for companies who will double their workforce but face descending markets.

Construction challenges

Good grief. I was so disappointed to see the names of the intellligencia assocated with that one.  Sure, there will be massive pressure as a result of the rebuild of the Garden City…but like it or not, the Chinese, Phillippino and Southern Asian workforces are already being contracted to come in and assist with the rapid requirements that our internal economy or workforce just won’t cope with.

Likewise, the product producers here will struggle, so for a time, outside material will be needed….but neither the workforces nor materials will be required beyond rebuild…so sorry guys, subsidies are off.

Oh, and here’s what Gerry B said the other day about housing requirements in and around Christchurch:

http://i.stuff.co.nz/national/5788967/Push-for-45-000-new-homes-in-Christchurch

Now that is a zipp-load of houses, more than in all of Dunedin…so you’d won’t be surprised to learn several home builders are on the cusp of bringing large numbers of overseas-sourced precut homes into the country. And why? Because in the last 20 years I seem to recall the greatest number of homes built in NZ in any one year was just over 30,000. So when you think that the rest of NZ is regarded as already being behind by over 50,000 homes, local suppliers just won’t keep up.

GOOD NEWS FOR RURAL SECTOR

SLIGHTLY LOWER FARM GATE PRICES BUT INCREASED PRODUCTION

ANZ Bank’s daily summary predicts better returns across most rural sectors this year on the back of excellent Autumn and Winter growing conditions delivering production increases that will more than make up for any export price contraction.

 “The 2011–12 season is off to a solid start. The theme this year looks like softer farm–gate prices will be offset by better production, subject to the weather gods continuing to play their part. The lift in production will not help offset the entire decline from softer prices, but will provide a soft landing for total gross revenue.”

SUGAR FUTURES HAVE NO FUTURE?

No future for Sugar Futures?

You may have noticed in the media that investors around the world recently dumped their investments in ‘sugar futures’ amid concerns that longer term, the increasing prevalence of adverse weather events could damage sugar cane volumes.

What excited me was the comment in the Wall Street Journal that “….this downselling of high priced futures in sugar will likely see the prices settle back to match demand!”

Isn’t that the way it should be!  In my innocent view, I wonder whether those involved in that strange investment world of Futures just might turn to bricks and mortar.

YES, WE HAD IT RIGHT! BANKS TOUTING FOR MORTGAGE APPLICANTS.

Weeks ago we commented that your clients might expect a mortgage war of some sorts, later in October.

Well, while most banks have for some time been offering all sorts of incentives to prospective mortgage applicants, HSBC hit the ground running last week with an announcement that they have dropped their fixed loan rates…admittedly targeting high end clients taking out large loans.  Good news though, which will perhaps see more activity in the higher end of the market and or in the holiday regions.

http://www.stuff.co.nz/business/money/5760394/HSBC-slashes-rates

WHAT IS HAPPENING IN REAL ESTATE IN UK AND AUSTRALIA?

Some interesting learnings from my fleeting visits to England and Australia lately; both markets are troubled, the UK flat for several years now, with flat line values in all areas except London, where, within an hour of the centre, there is still value growth and yes, the leading sales professionals are doing almost as well as they did five years ago. The market is back by half compared with those good old days.

Real Estate around the Globe

Across the ditch and things are going downhill in most markets…both numbers and prices, although good property in Sydney and Melbourne still attract strong offers. Auction clearance rates are certainly coming back and exceptional  bargains are being seen at discretionary venues as was the case here… at  prime tourist spots….Port Douglas, Cairns, Surfers etc.

What interested me most though was, through discussions with a wide variety of people in the industry and in both countries, that in the cities and especially those with traffic issues, small offices in retail streets and main thoroughfares are the current focus; four through six staff, management functions back at a base elsewhere and the rationale? People walk to most places or catch cabs….so, offices are no more than a comfortable walk away from anyone.

To give you an example, one group is targeting a further 150 ‘small format’ offices in the city but only half that number in the rest of the state where they favour larger, regional offices. Other groups support offices with effectively sole trading areas, so these are larger is size and further apart.

In London, the market is dominated by several very large and often family-owned companies with up to 100 offices, though several  with 50.

Everyone is seeking to double their property management portfolios and most focusing on internal growth with known landlords.

What was pleasing I guess, and this is the competitive streak in me, is that we are without doubt through the mill further than either country. While we all wonder what the Euro-mess is going to deliver,  we are to some degree, outside it and do have products many buyers across the world want…so just maybe we are more secure. When industry slows, nobody buys coal, gas or ores…but they still gotta eat!

All commented that NZ as an investment market cropped up from time to time in their offices…and we know  there are some cashed up Aussies poking around and if you read up on move2nz.com you will see their reports on increased enquiry from the UK.