Gisborne and Hawkes Bay will receive $9.2m from the Provincial Growth Fund for tourism and forestry infrastructure projects. Photo / Supplied
Where to invest next? It's the question that most influences the thinking of commercial and industrial property markets the world over, says Ryan Johnson, Bayleys national director commercial.
Johnson believes that New Zealand, investors have tended to focus on the Golden Triangle of Auckland, Tauranga and Hamilton — the country's economic engine room — as well as Wellington, Christchurch and Queenstown.
"But opportunities are beginning to present themselves in the regions," says Johnson.
"Regional economic development Minister Shane Jones has been given $1 billion a year to fire up the regions' economies, and with infrastructure projects looming large in his spending plans, the outlook is looking favourable for commercial and industrial sectors in previously overlooked or ignored markets."
The first regions to benefit from Jones's Provincial Growth Fund, to the tune of $61m but equating to $344m once private sector investment is factored in, are Northland, East Coast, Hawke's Bay, Manawatu-Whanganui and the West Coast of the South Island.
The projects, which Jones says will create more than 700 new jobs, include:
• Northland: $17m for two cultural centres in Opononi and Whangarei; $9m to upgrade the Waipapa Intersection on SH10 near Kerikeri; $2.3m for a new tourism hub in Kawakawa; and $450,000 for a totara industry pilot to explore new forestry market.
• Gisborne and Hawkes Bay: $9.2m for tourism and forestry, including $5m to reopen the Wairoa-Napier line for logging trains, which the Government estimates will take 5700 trucks off the road; $2.3m for the redevelopment of Gisborne Inner Harbour; $1m for a project to mark the first encounter of Maori and Europeans; and $60,000 for the following tourism projects - the Mount Hikurangi experience, Chardonnay Express and Waka Hourua Tairawhiti.
• Whanganui: $3m for upgrades to the Whanganui line for locomotives carrying exports; and $3m for the revitalisation of Whanganui Port.
West Coast: $1m for further development of the Great Rides cycle trails; $350,000 towards a waste-to-energy plant in Buller; and $100,000 for future planning for tourism in Punakaiki.
In addition, Jones has earmarked $750,000 for feasibility studies into rail in Kawerau, Southland and New Plymouth and announced a working group on trucking and rail in the upper North Island, to investigate the future of the Ports of Auckland and whether Northport is a possible replacement. There is also likely to be a closer investigation of a commuter rail link between Tauranga, Hamilton and Auckland.
Johnson says major road and rail infrastructure provides the backbone for commercial property investment opportunities — it's where business and industry tends to congregate — so the Government is to be commended for its commitment to building capacity in areas of New Zealand that have fallen behind the rest of country.
"Auckland has tended to dominate conversations around infrastructure, and without a doubt, there is a real need to improve transport in the city and develop transport infrastructure and strategies that plan for and lead population growth, not simply react to it. But now is the time for the regions to shine.
"For the commercial property sector, the fund is an opportunity to invest in regional markets that have huge untapped potential for growth. Major infrastructure projects will undoubtedly attract the attention of big investors and developers but their proven ability to drive economic activity will create opportunities for smaller players, too.
"The cherry on the top is the Government's positive moves towards increased decentralisation of government sector departments, which would drive regional employment levels and revive office and service sectors.
"This has the potential to provide a greater number of investment opportunities in new locations, benefiting a buyers' market somewhat starved of options.
"For investors looking to achieve capital growth, the best strategy will be to focus attention on locations where spending on new infrastructure, particularly transport infrastructure, will drive demand for commercial real estate. Being able to keep track of upcoming projects and research local authority and central government economic growth plans has never been more important, because the best time to buy in an area is before it starts to feel the benefits of a new infrastructure project, when prices have not had a chance to climb."
Property Institute of New Zealand chief executive, Ashley Church, believes growth kickstarted by the Government will spread across all sectors of the property market.
"There will be growth in demand for housing which impacts all service sectors, pushing up farm prices, though tourism is not such a logical link. There are a whole lot of infrastructure issues there."
He adds: "Tauranga and Hamilton have done well because of their proximity to Auckland, and Auckland is growing primarily because of migration. For migrants, I think it comes down to opportunity. There are opportunities in the Bay of Plenty and in the Waikato and indeed further south.
"I think if we were having this conversation in 10 years' time, you might find that that success story has continued further south to Taranaki, potentially Hawke's Bay and even Manawatu. All of those areas are growing. Traditionally, their economies were areas built on the back of horticulture and viticulture and agriculture, but now their economies are diversifying in the same way that Tauranga did 20 years ago."
