The South Island economy is humming, so what’s the property market doing?
Despite the economic upturn and promise of prosperity in the South Island, we are yet to see a true reflection on the property market, which presents a huge opportunity
The North Island (and Auckland in particular) has long been considered New Zealand’s economic engine, but these days the South Island is doing pretty well too – perhaps even better.
As a region the South Island may have less than a third of the country’s population, but that has never stopped the region from punching well above its weight, demonstrated by its rich history of pioneers leveraging the latest technologies to lead the way in New Zealand, from the goldmining and sawmilling days through to dairy farming and tourism.
Interestingly – and what will certainly pique the interest of savvy investors – there appears to be a disconnect in the region. Despite the economic upturn and promise of prosperity, we have yet to see a true reflection on the property market, which presents a huge opportunity.
In addition to gains from industries like agriculture, mining, and winemaking (which I can assure is quality), tourism has skyrocketed following greater national and international awareness of what the island has to offer on the back of successful marketing campaigns and global productions like ‘The Lord of The Rings’.
The growth of interconnectivity both nationally and internationally is also contributing to the accessibility of the South Island. Although there are still natural barriers to covering physical distance, the growing number of international flights to areas like Christchurch, Dunedin, and Queenstown reflects the increasing demand from the surge of international tourists.
For example, according to tourism stats from the Ministry for Business, Innovation and Employment (MBIE), the number of guest nights for the year to January 2019 per capita in Auckland is 4 while Wellington has 6. Canterbury more than doubles that effort with 9, but the West Coast and Otago well and truly swamp it with 41 and 27 guest nights per capita respectively.
Similarly, the median annual earnings for individuals working in agriculture, forestry, and fishing in the South Island dwarfs the figures from the North Island, in addition to showing promising signs of growth.
This is opening business opportunities all across the South Island, and for the traditionally most remote parts of the country, a seismic shift in ‘business as usual’ is already in motion with growth among businesses evident throughout the region.
It would appear that a growing number of the investment community already realise this as the South Island’s property market is showing signs of a surge in the second half of 2019.
An example of this is a decommissioned cement plant in Westport on the west coast that we recently successfully brought under offer. The more than 500 hectare piece of land presented a complex deal with many moving parts including mining licences, water rights, dairy farm land, rail siding, coastal land and housing, but it has been pounced on for its huge development potential.
Looking ahead, we fully expect to see the savvy investment community continue to see and seize opportunities like this for South Island investment as the growth of the local economy spreads to the property market.
Furthermore, we are aware of a growing number of South Island owners who have achieved their practical property owning goals in recent years but don’t have the resources to hand to make substantial upgrades. These owners are now looking to capitalise on growing positivity into market sentiment and offer development specialists the opportunity to reinvigorate assets with substantial potential.
One thing is clear – shrewd investors will be those that make their move sooner rather than later, acting before the property market adjusts to the local economy’s newfound prosperity!