Wellington MARKET FOCUS WELLINGTON TE ŪPOKO O TE IKA a MĀUI

Wellington MARKET FOCUS WELLINGTON TE ŪPOKO O TE IKA A MĀUI

Picked for growth since mid- 2015, New Zealand’s capital city burst onto the 2016 property stage, piquing the attention of investors and media alike.

Wellington is the capital city and second most populous urban area of New Zealand, with 398,300 residents. It is the administrative centre of the Wellington Region, which also includes the Kapiti Coast and Wairarapa.

Way back in August last year, BNZ chief "A year after Wellington's property market economist Tony Alexander picked out started going into orbit, the traditionally Wellington as one of the best long-term working-class suburbs are reaping the capital growth opportunities. rewards.

He pointed to the main indications of the "Rongotai, a suburb of workingmen's capital’s prospective growth: “the fact few cottages surrounding Wellington Airport, was head offices are planning to shoot north now, the prime mover with an average change in the coming long-term benefits of the median value of 25.5 per cent, or $125,650. Transmission Gully Motorway, IT sector, culture, runway lengthening and the film "Kilbirnie, Newtown, Kingston and Newlands sector.” rounded out the top five, all recording an Now that the Auckland median house price annual upswing of more that 20 per cent with has crossed the $1 million mark, Wellington median values jumping between $82,600 in is attracting property investors more and Newlands and $103,800 in Kilbirnie over the more. past year." (Source: Stuff.co.nz)

Market Drivers COLD WARM HOT INFRASTRUCTURE INVESTMENT

POPULATION GROWTH

PROJECTED RENTAL GROWTH

DIVERSITY OF ECONOMY

SUPPLY AND DEMAND

VACANCY RATES

PROJECTED CAPITAL GROWTH

ESTIMATED RENTAL YIELDS

AFFORDABILITY

COUNCIL PLANNING

POPULATION GROWTH Source: IDNZ

DEMOGRAPHICS In 2013, 72.8% of the population in the Wellington City identified their ethnicity as European. 24% of the Wellington City’s households contained only one person, with the most dominant household size being 2 persons per household in 2013.

Infrastructure Spending

Transmission Gully Estimated Spend: $850 million

Transmission Gully will be 27km of 4-lane motorway opening up a new corridor to the capital. This will reduce reliance on the Kapiti Coast as the sole route to Wellington from the West Coast. The Gully will reduce congestion, reducing commuter travel time. The Gully is expected to be open for traffic in 2020.

Wellington Airport Improvements & Runway Extension Estimated Spend: $358 million

Wellington Airport has started work on a $58 million extension to the main terminal building and apron. The terminal will cater for the expected increase of busy-hour flights to add Wellington to their list of global passengers from 1250 today to 1500 in destinations. The extension, once complete, 2021. This work began in 2014 and will be could bring $2 billion into the Wellington completed this year. economy. Wellington Airport has lodged a consent Source: http://www.stuff.co.nz/ application for a $300 million runway business/74347054/Wellington-Airports-runway- extension, allowing more international extension-could-pump-2b-into-the-economy

Wellington Market Focus Copyright © 2001-2016 Positive Real Estate (NZ) Ltd. 4 WELLINGTON Videos WELLINGTON’S NEW TRANSPORT HUB Construction has commenced on a new multi-level car parking and transport hub building at Wellington Airport. The project is part of a wider airport upgrade that also includes the main terminal extension and on-site four star airport hotel.

WELLINGTON RUNWAY EXTENSION The last major extension to Wellington’s runway occurred in 1972. It enabled direct jet services with Australia and transformed Wellington’s attractiveness for air travellers. Today, Wellington looks after more than 750,000 international passengers each year, there are 70 international return flights every week and the market will grow by at least 15% this year. But despite this growth, our air connectivity still lags behind. It is now time for the next phase of growth… Boeing’s B787 and Airbus’ A350 aircraft have the potential to directly link Wellington with Asia and North America. That would be a significant advantage for the region’s business, education and civic communities. But those time saving direct long haul services cannot use Wellington’s existing runway – which is why Wellington City Council and Wellington Airport are looking at extending the runway again.

TRANSMISSION GULLY The Transmission Gully project is a Public- Private Partnership (PPP) project to build a 27-km four-lane (two in each direction) motorway from MacKays to Linden (through Transmission Gully). There will be interchanges connecting the route to MacKays, State Highway 58, eastern Porirua and Kenepuru. The link to eastern Porirua will provide connecting roads to Whitby and Waitangirua. The Porirua City Council will be the authority responsible for those connecting roads.

Wellington Market Focus Copyright © 2001-2016 Positive Real Estate (NZ) Ltd. 5 WELLINGTON Economics GROSS DOMESTIC PRODUCT WELLINGTON’S EXPECTED GDP The Wellington region’s total GDP was $30.3 GROWTH (AS % OF NATIONAL GDP) billion for the year ended March 2014. This is 13.2 per cent of New Zealand’s GDP. The Wellington Region has the second-highest GDP per capita in the country, at $62,021 (following Taranaki).

Source: Statistics NZ http://www.stats.govt. nz/browse_for_stats/economic_indicators/ NationalAccounts/rgdp-2015-infographic/ regions/wellington.aspx

PRIMARY INDUSTRIES 105,243 people living in the Wellington City in 2013 were employed, of which 79.3% worked full-time and 20.7% part-time (source: http:// profile.idnz.co.nz/wellington/what-do-we-do).

More Wellington City residents worked in professional, scientific and technical services or Public Administration and Safety sector in 2013 than any other industries (source: http:// profile.idnz.co.nz/wellington/industries).

TERTIARY INSTITUTIONS Wellington is home to two main universities (Massey University and Victoria University) as well as an abundance of polytechnics, schools and other tertiary education centres.

Wellington Market Focus Copyright © 2001-2016 Positive Real Estate (NZ) Ltd. 6 WELLINGTON Living in Wellington CBD The 2016 population forecast for Wellington Central is 3,462, and is forecast to grow to 7,499 by 2043. About 23,000 people commute into Wellington City every working day.

RETAIL HUBS Wellington is comprised of four main precincts, two of which are main retail centres: Lambton Quay and Cuba Street. Major Australian retail brand David Jones opened its first international department store on Lambton Quay in August 2016.

Other major malls, including DressMart and Westfield, are located outside of the city centre in the suburbs.

Supply and Demand HOME OWNERSHIP 55.1% of Wellingtonians own their own home (source: Statistics NZ).

LAND AVAILABILITY A substantial proportion of the greenfield supply is held in the ownership of two land owners and they are releasing vacant lots / new homes to the market at slow rates.

The majority of recent dwelling completions (approx. 80%) have occurred within the existing urban area of the city and some of these areas present significant cost and consenting challenges for developers and some sites tightly held by passive investors.

Some land is constrained by steep topography and requires costly earthworks and engineering to develop. Such sites will only be developed by parties with no immediate need to realise a return.

Source: Wellington City Council Housing and Residential Growth Study http://wellington.govt. nz/~/media/your-council/projects/files/housing- choice-supply/wcc-residential-study-final-report.pdf

Wellington property values have risen significantly across the board from July 2015 to July 2016.

Wellington’s growth for July 2014 to July 2015 was virtually flat. Source: QV Property Trends Growth Projections After reports of an atypically active holiday period, Wellington’s property market has burst into 2016 with heavy competition, and many properties selling well above valuation.

As referenced earlier, BNZ chief economist Tony Alexander believes that Wellington property is well placed for long-term capital growth.

See articles: 1 http://www.stuff.co.nz/life-style/home-property/75630989/firsthome-buyers-in-wellington- face-a-new-year-of-frenzied-competition 2 http://www.stuff.co.nz/business/74652117/sell-sell-sell-wellington-property-prices-on-fire

It’s Not Just Values We’ve Seen Rising. TOP 10 SUBURBS FOR RENTAL GROWTH

Houses (all bedrooms)

Flats (all bedrooms)

Apartments (all bedrooms)

Source: QV Property Trends

WELLINGTON HOUSE PRICES CONTINUE TO RISE, WITH NO SIGNS OF SLOWING DOWN There are no signs of a “winter slow-down” in Wellington, as the capital’s housing market continues to boom, a valuer says.

Figures from QV show the average value across the region rose to $504,794 in May, up 4 per cent over the past three months and 10.2 per cent year-on-year. READ MORE

FEWER WELLINGTON HOMES THAN EVER UP FOR SALE AS PRICES SOAR Wellington’s soaring property market, which saw house prices rise by $7000 in a single month, is being described as crazier than the 2007 boom.

While the record-high prices and unprecedented low housing stock can be read as good new for sellers, those wanting to climb aboard the property train are getting left further back in the dust. READ MORE

THE BIG SQUEEZE: WELLINGTON’S POPULATION COULD ALMOST DOUBLE IN NEXT 30 YEARS Wellington’s next city council will have a job on its hands to keep houses affordable and stop the city from bursting at the seams, with predictions its population could nearly double over the next 30 years.

Council chief executive Kevin Lavery has suggested in a pre-election report that the council’s current prediction of an extra 50,000 people living in the capital by 2043 may have been grossly underestimated. READ MORE

PROPERTY PROJECTS TAKE ROOT IN THE CAPITAL It’s been a week of announcements and completions in Wellington, with a major office refurbishment, an airport extension and a coastal office block all in the news.

The first is the completion of Kiwi Property’s Aurora Centre which has been revamped for the Ministry of Social Development.

Situated at 56 The Terrace, the ministry has taken an 18-year lease on the building, which is within close walking distance of the Beehive. READ MORE

WELLINGTON REVEALS PLANS FOR A $7 MILLION ‘GREAT HARBOUR CYCLEWAY’ Wellington’s great harbour cycleway has moved a step closer to reality.

Plans have been revealed for a new $7 million shared cycling and pedestrian path around the capital’s bays between Waitangi Park and the Miramar cutting.

It will follow the waterfront along Oriental Parade, Evans Bay Parade and Cobham Drive. READ MORE

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