The commercial property market appears to be on a strong footing in the regions.
From his base in Hamilton, Mike Neale is well positioned to assist vendors and purchasers across the Waikato and Bay of Plenty.
Demand is pushing up prices, rents and leases, but supply is growing too. Coupled with growth in transport networks, this is highly promising for the Waikato and Bay of Plenty, Neale says.
“Hamilton was once the poor cousin in the Golden Triangle, but it’s firmly on the radar now.
“We’re seeing an increasing amount of investors from outside come in, from Auckland and Wellington particularly,” he says.
“Tauranga has been the golden child in many ways, with a more affluent population, but I think it’s evened out a lot more now.”
Neale is managing director of NAI Harcourts in Hamilton and has more than 20 years’ experience specialising in commercial real estate.
Overall, the commercial real estate market has been showing a return to good form, he says.
“There’s certainly a lot more interest in commercial property. It’s been driven by the lowering of the Official Cash Rate and particularly bank deposit rates.
“People are looking at other forms of investment so there have been significantly more inquiries and we’re certainly starting to see a rise in values.”
In general, the residential and commercial markets both seem to be showing similar positive signs.
“During the last few months, properties that had been sitting on the market are now sold.
“As demand increases, invariably values go up and that’s absolutely what we’re seeing now. It’s cyclical, which isn’t a bad thing really, and not too much different to houses in that way.”
However, there are marked differences.
“Generally, people buy residential real estate for capital gain but they tend to buy commercial real estate for cash flow,” Neale explains.
“You may not get the gains that you can from residential property, but you will get a much better return in cash flow from commercial property.”
Unlike some urban centres, there’s room to grow in the Waikato/Bay of Plenty region.
“Wellington’s very constrained, Auckland’s moving further and further out, but we have a lot of land for development, particularly for the industrial sector.”
Looking ahead, Neale is optimistic.
“We’re seeing a lot of businesses come to Hamilton, which really has increased in the last six to nine months.
“We don’t have really big highs and lows that the likes of Auckland might, but we’re very steady.
“In Tauranga, it’ll be more or less the same, although it has a few more limitations,” he says.
“I think we’re going to see a steady improvement across the board, which is really positive. Overall, I’m expecting it’s going to be a really positive year.”
