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Regional Review - Nelson/Tasman

Monday, May 25th 2015, 12:00AM

by Carolyn Cossey

There’s a lot to love about Nelson and the neighbouring Tasman District. From the air, the curve of Farewell Spit is one of New Zealand’s most distinctive landmarks. It’s the geographical centre of New Zealand, and it has all those sunshine hours. Nelson’s vibrant city centre is the gateway to superb beaches, with the Abel Tasman and Kahurangi National Parks on its doorstep. Creative industries, and alternative energies flourish in communities along the coast, with 300 working artists in the region.

The secret is out, though, as Nelson’s population growth rate is one of the highest in the country. Figures from the 2013 Census show Nelson had the second-highest growth for New Zealand, and the highest percentage in the South Island, in the stretch between the 2006 and 2013 Census, at 8%. Just next door, the Tasman District came in second in the South Island, with 6% growth between the census years.

Glenn Morris is well placed to know the Nelson property market. He is the long-standing secretary of the Nelson Property Investors’ Federation, ran an independent property management company, and has been buying investment property in the region since 1992. 

Morris sees growth as Nelson’s point of difference from other regional cities. “They say that this year the population of Nelson will hit 50,000. To put that in perspective, when I first moved down here in 1971, I think it was in the mid-20,000s”, he says.

To support the growing population, there is plenty of employment in Nelson.

Primary industries
The sea is an important resource: Port Nelson is the largest fishing port in New Zealand and Australia and it makes sense that New Zealand’s foremost fish processing companies are also here, in NZ Sealord, and Talley’s, based around the bay in Motueka.

Other significant primary industries are logging, fruit and dairy. Science and technology institutions base themselves here, including the Cawthron Institute which leads New Zealand in freshwater and coastal science. The Nelson Marlborough Institute of Technology, which draw students from beyond the region, offers diploma and degree courses.

Stewart Henry, of Summit Real Estate, says: “Nelson attracts a variety of tenants. We deal with young families predominantly, many involved in the fishing industry and forestry as well as adults studying, hospital staff, and professional couples. We get semi-retired people from out of town looking at the fabulous lifestyle here. Vacancy rates are tightening up and out of 950-odd rentals we manage in this area we would have only five to 10 vacant at any one time over the last few months.”

Nelson is a significant refugee re-settlement area in New Zealand, more so since the Christchurch Earthquakes. By 2012, according to a report by the Nelson Multicultural Council, around 750 former refugees had been resettled in Nelson.

An element of seasonality marks the Nelson and Tasman rental market. Richard Kempthorne, mayor of Tasman District, puts the seasonal pressures on rental properties in Nelson and Tasman down to both the high tourist numbers that pass through the region over summer and seasonal workers.

“November to April is our tourist season, with different waves of visitors at certain times,” Kempthorne says.

Work relocation

“Harvest season in the Tasman District is from February to the end of April, and we have around 3,000 extra horticultural workers coming in.” In the New Year period, professionals often relocate for work at Nelson Marlborough Technical Institute or Nelson hospital.

Juliet Robinson, franchise owner of Quinovic in Nelson confirms: “There is very much a seasonal aspect to our market. Our peak season to rent properties and therefore maximise rents in Nelson is between November and February.”

Topography is an often used term in Nelson. Glenn Morris says: “From my window here at home, everywhere I look are hills, and on the other side we are pushed up against the ocean.” This is a major contributor to higher property prices in Nelson, comparative to other regional centres of a similar size.

Development around the city centre has been expensive.

This is an issue that Nelson mayor Rachel Reese is keen to address. “As part of Nelson City Council’s Long Term Plan 2015-2025, which was out for consultation until April 28, we included a development contributions waiver. The new draft development contributions’ policy remits contributions for 30 new residential developments in the CBD each year over the next five years.”

A development contribution is a general cost a developer must pay toward infrastructure (such as stormwater, wastewater, water supply and the transport network) at the start of each development. The standard cost of this is $11,800.

“We have limited it to 30 each year, based on the capacity of existing infrastructure. Essentially this means an extra 150 individuals, couples or families could be living in Nelson’s CBD in the next five years.” 

Mayor Rachel Reese continues: “Another feature of this draft policy is that it also gives a remission in development contributions for new one- or two-bedroom units that are being built on an existing single title. This includes second dwellings and minor units, such as a granny flat, and apartments. The contribution would be either half or three-quarters the normal contribution cost, depending on how many bedrooms were provided.”

Another answer to traditional difficulties of development around Nelson itself, is the growth of Richmond, 13 kilometres south of Nelson City, and the seat of the Tasman District Council. Richard Kempthorne says: “Tasman is experiencing significant and steady growth.
Reverse of tradition

“We have a very effective mall in Richmond, which services not just that town, but the surrounding country areas, Stoke and Nelson city. We now have K-Mart and the Warehouse there. What is significant is we are seeing a reverse of the traditional set-up. People are beginning to live in Nelson City, but work in Richmond, giving us a two-way traffic flow there.”

Terry Bolitho, owner of Bolitho Property Management, with its office in Richmond, says Richmond is a “great news” story. “It is a rapidly growing retail centre,” Bolitho says. “The influx of national retailers has created a real hum, and vibe. It has reached a critical mass where it is seen as a desirable place to be, that there is no longer such a need to go to Nelson city from Richmond. The housing stock is new, from the mid-1960s onward. There are no gulleys or cold spots.”

Juliet Robinson says Richmond is very much a sought-after area given the school zones. “Richmond central retail growth and the community facilities Tasman District Council continue to develop, not the least being the huge Saxton Field Sporting complex and of course, recently the developed cycleway that runs from Nelson right through to Kaiteriteri,” Robinson says.

Across the whole region, Stewart Henry says tenants are looking for well-maintained homes. “The best types of houses according to our property managers are three bedrooms with a permanent heating source preferably a fire or, second best, a heat pump, definitely garaging and a fenced yard. Also, properties freshened up with neutral décor and modernised kitchens and bathrooms rent for better money and quicker than ones that are a bit dated even though the dated ones may be of a higher value.”

Juliet Robinson encourages investors to keep the Nelson CBD in mind. “It is the business hub as opposed to Richmond becoming more of the retail hub,” she says. “Close to the inner city is highly desirable as fuel costs continue to have an impact. The Wood, Nelson East and Nelson West have refurbishment potential for investors looking to buy low and increase the value by doing up and listing for rental.”

Prices stagnate

Glenn Morris is positive about Nelson for investors. “Coming out of the Global Financial Crisis, Nelson led the recovery in the property market, but since prices have stagnated,” Morris says. “That’s good news for investors. Over the last years, gross rates of return have been improving, rents are up, but the price of houses is not.” He has recently culled his portfolio to a ‘retirement’ number of properties, focussing his residential investments on units for their better returns.

Terry Bolitho has invested in property in Nelson for 30 years. “The strategy for me has been to make the best of the opportunities presented at the time. In the beginning, back in the ‘90s, as a builder I was able to build in-fill houses on large sections, and keep them as rentals. In the early 2000s, houses were cheap, and the idea was to buy heavily, particularly in the lower quartile.”

Currently he sees a window of opportunity for investors in Nelson. “With low interest rates and attractive prices on a lower quartile house, you can have surplus from your income for rates, insurances and maintenance.”

“The Nelson-Tasman region is leading the field in terms of average rents,” Juliet Robinson says, “It’s a real option for investors looking for good returns with the added benefit of being a really nice place to retire to in time.”

And you can’t argue with that: The locals all wax lyrical about the beaches, lakes, handy alpine playgrounds, cycleways, and, don’t forget, all that sunshine.

If your looking to invest in this region contact Quinovic

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 ▼3.35 ▼3.19 ▼3.85
ASB Bank Special - ▼2.85 ▼2.69 ▼3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 ▼2.69 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - ▼2.65 ▼2.79 ▼3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
The Co-operative Bank - Owner Occ 4.40 ▼2.79 ▼2.95 ▼3.39
The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

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