News & Opinion

A busy time for PMG and the New Zealand commercial property market

12 December 2016

A busy time for PMG and the New Zealand commercial property market

 

The few months between Property Line issues has been the busiest in history for PMG. Not only did we oversubscribe the $15m July capital raise for Pacific Property Fund a week early, but we are thrilled to have filled our biggest ever capital raise to date - $44m across two offers (read more page four). We’ve also hosted our first series of investor roadshows, opened our Auckland office, and successfully rolled out our new property health and safety management application, Forsite.

And that’s just what’s happening within our control, which segues me to Brexit, President Trump, and most recently the devastating Kaikoura and Wellington earthquakes of 14 November 2016. Whilst investors can factor in planning for major geo-political changes such as Brexit and President Trump, it is difficult to plan for the consequences of natural disasters. And simply avoiding regions or property on the whole is not the answer, as such events have an impact across all markets.

Instead, at PMG we believe in diversifying as a measure to manage risk. This was the strategy behind the launch of Pacific Property in 2014 and now with the launch of PMG Direct Office Fund. By diversifying across property types, tenant types and regions, investors aren’t as exposed as if they had all their funds in one property should the unexpected happen – such as losing a major tenant, or at worst earthquake damage as we have seen in recent years. Furthermore, by pooling investors together we are creating scale with the potential to act as a secondary market – creating greater liquidity.

Finally, as our esteemed roadshow presenters also shared, New Zealand is well insulated from the world’s unrest. We have low inflation, low interest rates, steady growth and a booming tourism sector. It is also well known that property in New Zealand is seen by investors globally as an attractive place to invest– which is in part driving the record breaking home values in regions such as Auckland and Queenstown. The commercial property sector in particular is well poised to leverage the current environment threefold – it is not as prone to the fluctuations of the residential property sector; is well poised to leverage improved business confidence which in turn drives growth and demand for quality premises; and continues to provide sustainable returns to investors seeking better yields than interest rate driven term deposits and global property trusts.

Scott McKenzie
Chief Executive Officer & Director