Marlborough: Recession? What recession?

Thursday, 17 July 2008, 3:16 pm
Press Release: Bayleys

Recession? What recession?

A booming viticulture industry, a marked rise in dairying activity, and a buoyant commercial property market have combined to help Marlborough’s economy buck the national trend of economic recession.

Several key indicators in the region’s business community are reflecting huge upsides over recent months – at a time when much of New Zealand is struggling.

Specialist commercial property agent Grant Baxter of Bayleys Marlborough says buying activity in the region’s commercial sector is particularly buoyant – flying in the face of glum sales figures coming out from other property markets around the country.

In the past seven months, Mr Baxter has sold eight properties in the region, including:
• Duncannon Holiday Park, Riverlands, sold for $1.95million
• 35 Main Street (which houses Blenheim Fire and Tile Centre, and Marlborough Freight Ltd), sold for $1.1million
• 34-36 Main Street (former Landpower business) sold for $752,500
• 19 Vernon Street, Riverlands (former Huntaway Products Ltd) sold for $560,000
• Mount Richmond Forest Estate, Rai Valley, sold for $950,000
• Airport Motel, Renwick, sold for $1.1million
• 19 Haven Road in Nelson which is fully leased to a Government department. This was sold to a Blenheim investor for $2.55million.

Earlier this month, Bayleys also brokered the successful auction of 1–7 Herbert Street in Marlborough for $2.175million - resulting from 17 bids. With annual rental income of $185,760, the sale price represents a gross yield of 8.54 per cent. Grant Baxter and Bayleys associate Glenn Dick were joint agents.

Additionally, Parklands Marina Holiday Park in Marlborough is under contract – with confirmation due in early August. The property is now being marketed as a multi-titled recreational accommodation site with sections ranging from $53,000.

“The commercial property market in Marlborough is quite strong at the moment – investor confidence is high, and activity across the commercial sector is showing that astute investors are prepared to take a long term strategic view of property buying in the current economic climate,” says Mr Baxter. “This latest batch of sales results simply highlights the clear difference between residential and commercial property.

”These commercial property investments also reflect positively on the longer term outlook for the Marlborough regional economy. Business is saying that the long range forecast for our local economy is optimistic and now is a good time to begin investing for the future.”

However, it’s not only Marlborough’s commercial property sector which is showing strong activity, but also rural support businesses – with Gordon Handy Machinery Ltd delivering and taking orders for 30 tractors in May, and additional forward orders in hand for another 70 units, representing many millions of dollars in local investment.

General Manger – Sales and Marketing for Gordon Handy Machinery, Derek Johnson, believes the dramatic sales spike in farming equipment reflects up-beat long-term prospects for the viticulture, cropping and dairying sectors (with several large-scale farm conversions currently being undertaking in the region).

“Export-lead businesses are certainly charging ahead in the current market,” Mr Johnson said.

“These sectors have been simmering for the past few years while the likes of domestic retail and tourism for example have flourished. In effect, it’s a natural business cycle which sees some areas of the economy on an ‘up’ while others are ‘down’. This is definitely an ‘up’ cycle for the land-based production sector.”

Similar economic positivity is conveyed in the motor vehicle industry, where Marlborough’s Wadsco Motors recorded one of its best-ever sales periods in June – rolling 100 new and used Holdens, Subarus, and Suzukis off the yard.

Wadsco director Wayne Young said the dealership’s stellar result was the combination of Suzuki’s continual market dominance, mainly in the private sector, and Holdens selling well in the fleet market, with new Rodeo ute sales particularly strong.

“Business is up on all fronts – family, commercial and rural work vehicles. We’re astounded at just how much is being spent on vehicles,” Mr Young said.

“There are buyers paying cash up front, some are taking out finance deals, and the company lease market is still strong– so there’s certainly a lot of liquidity around the region and no indication of the negative news we’re hearing from the major cities. I think a lot of people have been squirreling away savings since late last year, and are now feeling confident their financial position is in good shape so they can afford to buy a ‘big ticket’ necessity like a vehicle – either for personal or business use.”

Marlborough Chamber of Commerce chief executive officer Tim Leslie credits the positive economic news to the continued love affair with Marlborough wine – particularly sauvignon blanc.

“Marlborough’s wealth largely relies on what happens on the land. The continued demand for Marlborough wines and a realignment of the US dollar helping all exports will have a flow-on effect across the whole province,” Mr Leslie said.

“There’s no denying that higher fuel costs, high mortgage rates and domestic budget pressures are making life tough for a large number of people. However, statistics such as these commercial property sales, farm equipment orders, and demand for viticulture support supplies, show that the underlying regional economy of Marlborough is still very solid, although we remain conscious of external cost pressures.”

ENDS

© Scoop Media

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