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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