The ‘Golden Triangle’ stretches north
Total Property - Issue 1 2018
The “Golden Triangle” – the term economic commentators use to describe the geographic area bound up by Auckland, Hamilton and Tauranga – has long been where the best commercial and industrial property opportunities lie.
It’s where about 50 percent of New Zealand’s population lives and much of the country’s economic activity takes place, and all signs are that it will continue to be fertile ground for growth.
Now the positive effects of that growth are stretching north of Auckland to Northland.
Population growth and an increase in residential construction activity is expected to boost the region’s commercial and industrial property sector over the next two years.
More benefits will flow from major upgrades to State Highway 1, which will reduce travel times to Auckland and key freight locations further south.
The tourism sector – already generating more than $1 billion in annual spend – is primed for significant growth, thanks to improved connectivity, and in Whangarei, Northland’s main city, there is strong interest from investors in modern, well-located and well-tenanted properties with attractive yields.
Property Institute of New Zealand chief executive Ashley Church says: “Northland should be a mecca. It’s got the best climate and it’s got massive untapped economic potential, and there is a recognition of that in the development of the Holiday Highway. It’s just a matter of time. Northland is in the same position that other parts of New Zealand were 25 years ago and that have since come ahead.”
The recent change of government and its focus on regional development could prove to be a significant catalyst for growth in Northland. The Labour-led coalition has announced plans to set up a $1 billion Regional Development Fund and invest in regional rail.
However, the game-changer is the possible relocation of Ports of Auckland operations to Northport – a major election pledge made by the Deputy Prime Minister and New Zealand First Leader, Winston Peters.
Mr Peters has secured a pledge from his coalition partners that the Government will examine the relocation as part of its wider ports strategy. It is understood the process could begin with a $500 million upgrade to the railway line north, connecting through to Marsden Point.
If it goes ahead, the project would create the biggest city centre development project in New Zealand for decades, require up to $10 billion in Government funding to get it off the ground, and bring new road and rail infrastructure and plenty of commercial and residential property development.
The potential for land to open up has attracted the attention of investors.
Brendan Lyon, chief executive of Infrastructure Partnerships Australia, whose members include many of Australia's largest Australian ports and infrastructure companies, told the Australian Financial Review late last year: “Transformational urban projects like relocating the port would also be an irresistible draw for major Australian and global investors and contractors to set up in New Zealand.”
Mr Church commends Mr Peters motives but believes the Government and Northland leaders need to more innovative in their approach.
“Moving Ports of Auckland is 1970s thinking. I understand what Peters is trying to do, but the idea of moving a substantial industry up there so the area becomes a new magnet for economic activity, that’s just not going to run. There’s got to be a another way of doing it.”
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