From the 1990s to the 2010s, a spectacular route for wealth-building here in Auckland was property development.
Interest rates levelled off (especially through the 2010s) and immigration opened up, with over 1 million foreign-born residents having reached New Zealand by 2015.
I knew a number of investors who built fortunes from property. Beginning with subdividing residential sections. Moving on to larger commercial projects. And in one case, finding tax advantages in developing a retirement village.
There was an artificial run-up in values as loose monetary policy flooded the economy in 2021.
By 2022 — and the new Auckland CVs of 2023 — it was clear that the party was over. The opportunity had dissipated.
Source: Image by Bernd Hildebrandt from Pixabay
These days, capital growth seems contained. The ground rules have changed:
- Immigration numbers are much lower, and the electoral appetite for more has changed.
- Local developers compete with offshore money.
- The scale and entry barriers are much higher.
- Margins on projects are much thinner.
- Rental yields are weaker.
For those operating at scale, there are still opportunities in property. Particularly for well-capitalised players who have spotted a niche with growing demand.
Let’s take a look at one listed operator seizing the moment…
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