www.propertyinvestments.net.nz University Investment Newsletter March 2015 - Issue 52 Welcome Welcome to our 52nd University Investment Update. Looking back The Landscape has changed.. (1999 - 2001) Forget historical property cycles. Gone are the days of doubling Lane Sievwright house prices every 8-10 years as experienced five times between 784 George Street m 021 526 366 1960 and 2007 when interest rates (and inflation) fluctuated from $225,000 a low of 5% in the early 60’s to peaks around 20% 1986/87. $69 x 7 According to “those who should know” we are now likely looking 11.16% at a continuation of the low interest rates, low inflation regime we September have been experiencing since the GFC (2007/08), for some years 2001 to come. 7.7 7.5 When we purchased one of our first flats in 1981 – 877 George Clayton Sievwright Street for $23,000, $11 per room, 4 bed villa, 9.9% yield there was m 021 191 5555 75C York Place no internet and we knew nothing about the University market other than the obvious supply of students seemed to $217,265 suggest buying flats close to where they would want to live seemed like a good idea. $85 x 5 For years we knew no other landlords and it was pretty much fly by the seat of your 10.17% pants. September 2000 There is now a plethora of property related information on the internet and everyone 8.4 8.2 involved in owning or looking at buying a property is now so much more market savvy. 17 Hyde Street Are you in the Loop? $146,000 While the quantity of articles, posts, blogs on interest rates, and a seemingly endless $68 x 5 stream of statistics relating to every aspect of property ownership is freely available on 12.1% the internet, the biggest problem is drilling down to what is really important to know in December relation to your own chosen line of investment. Most information relates to normal 2000 family homes and is of little use to investors other than giving an indication of their own 8.4 7.9 homes value. Property investment information although quite useful is fairly general and seldom drills down into localized niche markets if that’s where your interest lies. University of Otago – Campus is one such market and this is where we come in. In 10/700 Great King St marketing and selling the majority of student flats we are ideally placed to provide the $225,000 bulk of accurate feedback to both owners and potential buyers. $70 x 6 9.7% As investors ourselves we are well positioned to appreciate what we would want to know and other investors might find useful. There is no substitute for hands on July 1999 experience and to be fair after 30 odd years at the coalface of the student market, if it hasn’t happened to us it probably hasn’t happened. 6.4 7.6 So are you in the loop? Do you have access to all our information and do you know Interest rates at the time where to find us? If you are reading this you are part way there. Thisquarterly newsletter now has a circulation of 2,475 including not only owners of Prime Campus Floating 2 year fixed flats but also privately owned homes in the area, plus fringe and beyond if the property houses students. We also include every buyer (some of whom are now owners) who % % has enquired about investing here. Lane Sievwright and Clayton Sievwright e [email protected] w www.propertyinvestments.net.nz The University Investments Update March 2015 - Issue 52 www.propertyinvestments.net.nz On a weekly basis (every Friday), we email 1,652 buyers and very, very low to the point of deflation for years to come. There owners who want to keep up to date or who are looking to buy is now US $2 trillion invested in bonds and bank accounts that again with an update on the weeks activity, what’s new, under offer negative interest rates. Locally floating rates are expensive offer or SOLD. when compared to new fixed rates. Our R.B. is unlikely to raise interest rates in the foreseeable future – at least until well into On a daily basis new listings are emailed the minute we list 2016. Logic would suggest that in a market where interest rates them so in particular as a buyer you have a head start on anyone are predicted to stay lower for longer one should consider fixing not in the loop. short rather than longer. If you are not up with the play simply let us know your email So much for trying to condense a couple of pages of an article address and you’re in. into a few lines but time spent getting abreast of interest rate costs can be even more beneficial to cash flow than room rate Our specialist “propertyinvestments.net.nz” website is increases. designed to provide up to the minute access to new listings, current listings, sold information with price, rent and yield details, access to all our past newsletters and useful links to How’s the year shaping up - (sales in $ millions) helpful resources. 2015 2014 2013 2012 10 8.45 3.46 8.15 Our newsletter, email notification of new listings and weekly Quarter # 1 update is local, national and international. Quarter # 2 5.87 6.19 3.9 Quarter # 3 4.18 6.99 8.54 Locally and throughout Otago our presence is by far second to 10.08 7.58 6.85 none with a full feature page in the Otago Daily Times every Quarter # 4 28.58 24.22 27.44 weekend. Total e.g. quarter # 1 = Mid Dec - Mid March Our office is strategically located on George Street – Prime Campus, taking advantage of the high foot traffic in the area with window displays of all listed properties. The location is also INTEREST RATES 5th March 2015 (Major Banks) ideal for our Property Management team and has become a hub for students looking for flats. Fltg 1yr 2yr 3yr 5yr 5 March 2015 6.59% 5.7% 5.39% 5.69% 5.89% As for being in touch with the pulse of the market our own flats 4 March 2014 5.64% 5.49% 6.29% 6.35% 7.2% are scattered throughout Prime Campus giving us the advantage of a realistic view of sometimes subtle market 5 March 2013 5.74% 4.89% 5.39% 5.39% 6.25% changes on a daily basis. 2 March 2012 5.74% 5.65% 5.79% 6.1% 6.9% 10 March 2011 5.74% 5.95% 6.49% 6.69% 7.7% If you are missing out on any of the above services just get in touch. We are happy to pass on our knowledge and experience. If you are thinking about selling or need an idea of market value we are here to help. Handy tips T.V. Do you supply TV? Have you had a HDMI port not Interest Rates working? We had this last week and our TV guy tells us this is becoming a problem with students plugging their gear in while Where will they be tomorrow and in 5 years’ time? When you the port is alive. The TV must be turned off at the wall (not just the finally find that property or look at refinancing, sensible TV!). decisions can’t be made without the best possible crystal ball at your fingertips. More often than not economists don’t entirely Smoke Alarms Do you buy the cheapest smoke agree but there is often a thread of commonality in their views. A detectors? They are usually “ionization” and don’t work with recent article by Bernard Hickey on interest.co.nz is worth a a smouldering smoke fire. Always use photo-electric. Three read. Look for “whether to fix, float, how long to fix” etc., (Feb 17). breaths of dense smoke is all it takes for someone to not survive. Basically many countries are experiencing very low If you are buying a 10 year detector check whether it’s got a 10 inflation. Central banks in Europe, Japan and China have cut their year battery or its just 10 years on the unit. interest rates to 0%. Swiss two year bond yields now offer minus 1.2% (you got it! Savers are paying the bank to look after their Bonds If any part of the bond is to go to the landlord only money!). In Feb ANZ NZ borrowed 750 million euros at a rate of one student needs to sign. If a part of the bond is to go to only 0.625%! Inflation in the world’s most liquid markets is likely to be one or not all of the tenants – all students need to sign. Sold since last newsletter ($10,331,100) I’m Sold! PRIME CAMPUS I’m Sold! PRIME CAMPUS I’m Sold! PRIME CAMPUS 102 1&2 Harbour Tce 798 George Street 7 Queen Street Centrally located 5 Seven furnished studio Large three storey bedroom apartments rooms, separate living, property rented as presented to a high off street parking a nine bedroom flat standard. Rented and garaging. Zoned and already rented at $1,400pw, plus 2 at $135pr for 2015. $12pw for car parking. Res 3 and with 410m With room to increase Recently upgraded of land gives some rents and potential to with all the mod-cons. development potential develop further.