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

 

Media: Fairfax Moves To Create Modern Newsroom

Fairfax Media New Zealand continues its newsroom transformation this week, with a proposal to further organise its editorial operations into focused, local teams and specialist national topic areas. More>>

ALSO:

Dairy: Fonterra Forecast For 2015/16 Season

Fonterra Co-operative Group Limited has today reduced its forecast Farmgate Milk Price for the 2014/15 season to $4.40 per kgMS. Along with its previously announced forecast dividend range of 20-30 cents per share, the change amounts to a forecast ... More>>

ALSO:

BusinessDesk: SkyCity Lifts Minimum Convention Centre Investment To $430M

SkyCity Entertainment Group, the casino operator, has lifted the minimum it will invest in the Auckland International Convention Centre to $430 million and said total costs including land may be $450 million to $470 million. More>>

Statistics: Drop In Dairy Prices Leads Fall In Exports

Total goods exports fell $240 million (5.5 percent) to $4.2 billion in April 2015 compared with April 2014, Statistics New Zealand said today. More>>

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>


BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>

BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news