Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Residential property investment in Gisborne delivers returns

Residential property investment in Gisborne delivers returns 300 percent above bank deposit rates

The unassuming provincial city of Gisborne is vying for the title of New Zealand’s hottest residential property investment destination – with a three bedroom ‘renter’ in the city selling this month to an out-of-town investor for a return of almost 15 percent.

Real estate agency Bayleys this month sold the ex-State house in the city for $71,000 to an investor from Nelson. The three-bedroom/one-bathroom property on a 673 square metre section rents out for $200 a week, and has been occupied by the same tenant continuously for the past 10 years.

Bayleys Gisborne manager Karen Raureti said: “On those figures, the property generates an annual return of 14.6 percent – that’s more than three times the current 12-month deposit rates with the big banks, where you’re lucky to get 4.5 percent interest.”

“This latest sale is far from an anomaly though. We’ve seen a lot of 10 percent-plus rental yields coming through for residential investment stock selling over the past year,” she added.

“Our Nelson buyer noted that a 14.6 percent return was certainly far better than anything they could find in their own city – and is certainly way ahead of anything in the Wellington and Auckland markets where other Gisborne investors have been assessing values.”

Rental yields are found by taking the weekly rental return of a property, multiplying that by the 52 weeks in a year, dividing that total by the purchase price of the property, and multiplying that by 100 to give a percentage.

Earlier this year, ANZ bank produced a research report spotlighting what it had identified as New Zealand’s ‘hottest’ residential investment locations and suburbs.

Top of the ANZ’s location list – with a rental return of 8.3 percent was the Dunedin suburb of Forbury, closely followed by South Dunedin with a yield of 8.2 percent. At the bottom of the investment scale is the Auckland coastal suburb of Castor Bay delivering a miserly 2.7 percent return from rents, closely followed by the adjacent suburb of Devonport where investors could expect rental returns of 2.8 percent.

Ms Raureti said there was a big pool of ‘Gisborne ‘locals’ who had been investing in residential real estate in the city for almost a generation, and who were receiving double-digit returns far better than those identified in the ANZ report.

“Among that pool is a considerable percentage of Gisborne ex-pats who now live elsewhere in New Zealand, but still retain an affiliation with the region through family connections. For those ex-pats in the bigger centres, they simply can’t find the returns where they are living compared to what they can source in Gizzie, so they buy somewhere they know,” she said.

“While the capital gains seen in Gisborne may not be as spectacular as those recorded in the bigger cities such as Auckland and Christchurch, our rental returns certainly exceed anything they are producing – so it’s ‘one up’ for us little guys down here,” she added.

Ms Raureti said residential property investors had a markedly different psyche to owner-occupiers who bought homes to live in.

“A property investor calculates a property’s worth with a calculator. It’s a very cold and clinical process which looks at the ‘rentability’ of home – how much they can get per week in rent, and who will rent it.

“At the other end of the spectrum, owner-occupiers fall in love with their dream home and make their value assessment with the heart. By having those two vastly-different dynamics at play when a house goes up for sale, you can effectively capture the potential buyer market on behalf of your vendor,” Ms Raureti said.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Research: ‘Ageing Well’ Science Challenge Launched

Science and Innovation Minister Steven Joyce today launched the Ageing Well National Science Challenge, confirming initial funding of $14.6 million. More>>

ALSO:

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news