Property Quarterly (December 2011)

In this issueWhere have all the developers gone?Professional indemnity insuranceAbandoned land tenderSouthland feature

Issue 4 • December 2011

INFR

AST

RUCT

URE

ACQ

UISI

TION

VAL

UATIO

N IS

SUES

VALUATIO

N ISSU

ES MED

IATION

EFFECTIVE OWNERSHIP STRUCTURES

DUE DILIGENCE ACQ

UISITIO

N O

VERSEAS IN

VESTMEN

T INFR

ASTRU

CTUR

E DU

E DILIG

ENCE ACQ

UISITIO

N O

VERSEAS INVESTMENT INFRASTRU

LEASIN

G LITIGATI

PROPERTY MANAGEMENT

EFFE

CTIV

E OW

NERSH

IP S

TRUC

TURE

S AR

BITR

ATIO

N DUE

DIL

IGEN

CE M

EDIA

TION

LITI

GAT

ION

INFR

AST

RUCT

URE

SUBDIVISIONLEASING

DISPOSALS SUBDIVISION

OV

ERSE

AS

INVE

PROPERTY MANAGEMENT EFFECTIVE OWNERSHIP

ARBITRAT

ION

DU

E D

ILIG

ENCE

We provide expert navigation.

Simpson Grierson’s Commercial Property Group has a significant presence in the New Zealand commercial property market.

Our legal advice covers the full spectrum of twists and turns in the property sector including mediation, arbitration and litigation advice. In fact, you might say Simpson Grierson owns property.

Phillip Merfield – Partner P. +64 9 977 5096 M. +64 21 935 407 [email protected] Towers – Partner P. +64 9 977 5051 M. +64 21 963 653 [email protected] Scannell – Partner P. +64 4 924 3416 M. +64 21 437 644 [email protected] Lange – Partner P. +64 9 977 5013 M. +64 29 977 5013 [email protected] Craig – Senior Associate P. +64 4 924 3426 M. +64 21 044 6941 [email protected] Allen – Senior Associate P. +64 9 977 5164 M. +64 21 534 464 [email protected]

www.simpsongrierson.com

Vol 1, Issue 4, December 2011 Property Quarterly 1

Publication Committee

Iain Gribble Donn Armstrong Peter O’Brien Ah-Lek Tay

Contact details

David Clark Property Institute of New Zealand PO Box 11 380 Manners Street Central Wellington 6142

Phone: 04 382 7621 Email: [email protected]

Editor

Julian Bateson

Assistant Editor

Helen Greatrex

Bateson Publishing Limited PO Box 2002 Wellington Phone: 04 385 9705 Email: [email protected]

Publisher

Property Institute of New Zealand

Issue 4 • December 2011

ContentsCEO’s comment – Strategic issues and staff changes David Clark .................................................................................................................... 2Christchurch updateInner city kick start Simon Mortlock ........................................................................................................... 10Property overview – Effect of earthquakes on Christchurch City Alan Stewart .................................................................................................................13LegalRent reviews in Glasgow leases Niven Prasad .................................................................................................................14Ambiguity in sale and purchase agreement Niven Prasad .................................................................................................................17GeneralWhere have all the developers gone? Patrick Fontein ............................................................................................................... 5International Valuation Standards 2011 Chris Stanley .................................................................................................................18Abandoned land tender by Ruapehu District Council Ian Campbell .................................................................................................................20Property investment goes high tech – Real Estate Investar Steve Tucker ..................................................................................................................23Maori land – a perspective from an empowered property investor Tony Sewell ...................................................................................................................27Professional Pathways and registration in a professional community Allan Smee ....................................................................................................................28Professional indemnity insurance Ian Gribble .....................................................................................................................30Southland featureSouthland residential and lifestyle Robert Todd and Regan Johns ..................................................................................32Commercial, industrial and rural markets in Southland Trevor Thayer ................................................................................................................35Southland visit Nicola Bilbrough ..........................................................................................................37ProfileProfile of Evan Harris retail consultant and property manager .....................39

CEO’s commentAs 2011 comes to an end it is timely to look at what we need to achieve in 2012. From an economic point of view, the last three years have been extremely difficult and with the earthquakes adding to the woes, the property industry has had a difficult time. This was the backdrop when the Board met in August at Simpson Grierson’s offices to consider the strategy for 2012 and beyond.

Strategic issuesThere are a number of strategic issues that the Property Institute has been grappling with for some time and the strategic plan introduces measures to address these.

Age profile of our membership

Analysis of our member database indicates approximately half of our paying members are over 50 and 25 per cent are over 60. With more members expected to retire in the next five years than new recruits, a decline in members is probable.

CEO’s Comment

Depressed property market

The current depressed property market has reduced the number of graduates finding employment in the New Zealand market. Our conversion of students to members is therefore low.

Continuing Professional Development programme

In recent years the Property Institute has developed expertise and content for members via broadband technology. We also note that some national companies are moving to providing in-house training. The Lincoln and Massey spring seminars, run by the local branches, have provided members with an alternate source to ensure they meet their required number of hours.

All this has led to a decline in revenue from seminars at National Office. However, we will continue to develop the Professional Pathways Programme as we are confident this is the preferred medium for our younger members. We will also encourage the branches to continue their face-to-face and networking functions.

Connecting with members

Perusal of previous year plans suggest connecting with members has always been an issue for the Property Institute. The Institute now corresponds with members

2 Property Quarterly Vol 1, Issue 4, December 2011

by phone or email with no printed communications being delivered physically. Only 60 per cent of members have logged in to the Property Institute website. Our new magazine, Property Quarterly, is receiving good reviews and is providing members with relevant and topical articles for members. However, connecting with members remains a challenge.

Unity

The gap between some valuers and the Property Institute has been evident since the 2000 amalgamation. Although these members are generally older members, we need to continue to strive for a unifi ed Institute.

International policy

The Property Institute has a strategic alliance with the Australian Property Institute and also has associations with RICS, WAVO, IVSC and some individual organisations. Our policy is joined at the hip to API. There are obvious benefi ts to this as together with API we have a strong voice in the IVSC and other international forums. We are aware of the RICS increased presence in New Zealand with the appointment last year of a full-time New Zealand manager. A number of our senior members would like to see a closer relationship with RICS.

Critical outcomes

The Board agreed that the six crucial outcomes the Institute must produce by 2013 in no particular order are −

•Todeliverqualityeducationprogrammes

•ToincreasetheprofileoftheInstitute

•Toincreasepositiveinvolvementwithmembers

•Toensurebestpracticeisachievedandmaintainedbymembers and National Offi ce

•Toincreaserevenue

•Togrowmembership.

Quality education programmes

In 2010, the Education Committee agreed that National Offi ce should concentrate on its CPD programme primarily via broadband technology, and encourage the professional communities and branches to provide the face-to-face seminars and networking opportunities. The arrival of Allan Smee provided the Institute with the foresight and skills to develop a world class e-learning platform capable of producing high quality education.

Additionally, the professional communities were looking to establish a series of professional modules to assist members to develop professionally from graduate to registration and senior membership. The Professional Pathways Programme is being developed to meet this need. The Board and management see an opportunity to sell these modules, and others, to non-members to provide the

Institute with an independent source of revenue.

The Institute will continue to provide webinars, face-to-face seminars where appropriate and the annual conferences. In 2012, the conference will again be in Auckland and the 2013 joint conference with API will be in Queenstown.

To increase the Property Institute’s profi le

Going back to its formation in 2000, and earlier, it is apparent that the Institute and its predecessors have struggled to establish a high profi le in public and professional arenas. Initiatives specifi cally targeted to improve our profi le are −

•Areviewofourcurrentexternalcommunicationswiththe objective of defi ning and developing a better media presence and targeted stakeholder communications

•Developadefinedmarketstrategytopromotethebenefi ts to clients of engaging registered property professionals and to build the membership and presence of our current professional communities.

To increase positive member engagement

Membership engagement is another long-standing issue for the Institute. We recognise that the only physical connection the Institute has with all members currently is the ANZ Property Journal which goes to members each quarter. Anecdotal evidence suggests this publication does not meet members’ expectations, so has not provided the connection to members that we want. The initiatives planned to address this opportunity are −

•Ifthecostisnotprohibitive,printtheProperty Quarterly magazine and post to members, creating a vehicle to deliver messages physically to members

•Reviewourcurrentmembercommunications,theirexpectations of the Institute, and understand what the barriers to involvement are, and from this establish a programme to build member engagement

•ReviewtheservicelevelagreementbetweenPINZandNZIV. It is 11 years since it was established and probably requires refreshing, particularly since the government does not seem to have an appetite to repeal or review the Valuers Act 1948.

To ensure best practice is achieved and maintained by members and National Offi ce

The Board and Professional Councils recognise that to attract members, and to maintain a professional status

CEO’s Comment


General

similar to other professions, it is essential that quality education programmes are supported by models that measure and promote quality practices. The initiatives being developed to address this opportunity are −

•DevelopandlaunchtheQualityAssuranceAccreditationScheme (QAAS)

•Incorporatequalitymanagementsystemsintotheoperations of National Office

•NegotiatewiththeIVSCtoallowthestandardson-lineand accessible for members

•Establishnewcommunitiestoaddressagapintheprofessional support market.

To increase revenue

The Board has noted with concern the drop in revenue from 2008, see the graph below.

Apart from membership subscriptions all other revenue streams have dropped. With the predicted decline in membership numbers, subscriptions are also expected to drop in future years. The Board have asked management to come up with new revenue streams to supplement traditional incomes. The initiatives are −

•Considertheestablishmentofanewprofessionalcommunity to cater for residential property managers and corporate body managers

•Establishavehicletoselle-learningmodulestonon-members and develop tailored property-related modules that may offer some benefits back to members

•Establishandgrowasharedservicescapabilityforotherorganisations

•Developastrategytoconvertmorestudentsintopayingmembers

•MaketheIVSCstandardsavailableelectronicallyforsaleto non-members

•Developingandco-ordinatingaprofessionalpedestriancount nationally.

To grow membership

As described above, the Institute is confronted with a bulge in its membership profile as baby boomers approach retirement age. The Board recognises that if membership numbers continue to decline, service levels will also decline.

Initiatives to increase membership are closely connected to other strategic outcomes, such as −

•AProfessionalPathwaysProgrammeisrequiredtoattract and retain members

•Thenewprofessionalcommunitywillhavesignificantpotential as no other professional organisations are specifically catering for their needs

•Initiativestoimprovememberengagementwillassistinretaining members

•IncreasingtheprofileofthePropertyInstituteanddefining the value delivered to clients by members will motivate increased membership.

In addition to the above, the Institute will undertake a defined market strategy to attract new members for the current professional communities.

The Board and National Office is committed to the strategy and after three years of financial surpluses the Institute is in a position to bring about these outcomes. I am excited about 2012. It will be challenging, productive and rewarding.

Staff changesMembers may have noticed some new names at National Office recently. Jacklyn Hensch has left to take up a new role with EECA and Deirdre Moran will take parental leave in December. We wish Deirdre and her husband, Cormack, all the best for the birth of their first baby. We expect to see her back some time in 2012, and in the meantime Debbie Coates will look after the membership role.

Other newish names and faces are Jo Parry, who is project managing the QAAS project and hopefully soon to join the full-time staff, and Ali Quaintance who is providing us with marketing and communications guidance.

Christmas wishesThe Board will want me to extend their best wishes to all members for a happy and relaxing Christmas and for a productive and rewarding 2012. The team at National Office also wish members a happy and prosperous Christmas and New Year. I also thank all members who have so willingly volunteered their time, skills and experience to the Institute over the last year. We could not exist without your continuing support.

CEO’s Comment



Patrick Fontein

Where have all the developers gone?

What has happened to all the New Zealand property developers bashed around by the global financial crisis? This article looks at the conditions that were prevalent before the global financial crisis, why many of the developers suffered in the finance industry’s response, and what has happened since. I finish with some reflections on what could be expected in the New Zealand property development market in the next 10 to 15 years.

General

Patrick Fontein was the owner of Kensington Properties. In late 2008 the BNZ refused to roll over the land loan facility of the Kensington Park project and the project went into receivership. Patrick made attempts to arrange a creditor scheme from future earnings, but was eventually made bankrupt in late 2010.

Property market fundamentals The 1980s saw a large supply of CBD offi ce buildings developed from the exuberance of that decade’s sharemarket and the perceived requirement for offi ce space. The offi ce market and sharemarket crashed in spectacular fashion, and almost all the 1980s New Zealand property developers were wiped out.

The early 1990s saw the emergence of the multi-unit residential market, with many cities wanting to rejuvenate their town centres with residential populations following an international trend. This saw the emergence of mixed-use and multi-unit residential development, which was undertaken by a new batch of entrepreneurial developers. Some had reincarnated from the 1980s and a number of new developers emerged.

General

Aggressive fi nanceThe very early forms of multi-unit residential had some excellent developments – Quay West and Metropolis being early examples of buildings that are assets to Auckland. Unfortunately there were insuffi cient early urban design and building standards controls in the late 1990s, and many of the lower standard residential intensifi cation projects have left a blight on the skyline. Many of these have also had leaky building issues which will take years to remedy.

The ready availability of property fi nance from the mid-1990s to 2007 were behind the land price fundamentals of the mixed-use and multi-unit residential market. All the banks and second mortgage fi nance companies were very aggressive in offering fi nance, and it was this ready availability that was a large contributor in driving up land prices. Finance brokers structured fi nance deals on development sites whereby land could be bought unconsented.

However, as soon as resource consents were in place for development, the land values would rise so that fi nance could readily be obtained at levels above the original land purchase price. Developers were therefore able to place conditional contracts on sites, get resource consents during conditional periods, and then obtain virtually 100 per cent fi nance on the entire land purchase price.

Many developers took a more cautious approach. At Kensington Park Orewa, with the help of three high net wealth passive investors, the project started with a cash equity input of $14.1 million. This level of capital was substantially in excess of the levels required by the fi rst and second mortgage fi nance providers. There was also an ‘on short notice’ availability of a further $10 million of capital in case of deteriorating market conditions.

So what went wrong in 2007-2008?The initial rumblings of trouble were the structural failings of the New Zealand second-tier fi nance markets. Lending short from mum and dad investors, and on-lending long to two- to three-year development projects, relied on ‘mum and dad’ re-investing their capital. When the fi rst fi nance company failures started in 2006, re-investment slowed. The quality of some of the lending was exposed. When Bridgecorp collapsed in mid-2007, the entire second-tier fi nance industry was in free fall.

The global credit crunch was forming at the same time from a separate set of circumstances in the US and the UK, much of which has been written about. I will only talk about the effect on the New Zealand property industry.

Lending curbsThe liquidity of all New Zealand fi nancial institutions became increasingly under pressure. The universal response from fi rst and second mortgage providers was simple − stop lending. This was not the offi cial line, it was more along the lines of ‘we are re-weighting our portfolio away from property investment and development lending’. Much of the property lending was on longer-term investment properties, so curtailing lending on land became the favourite area.

There was a helter-skelter from all fi nance institutions to reduce the level of property lending, especially development land, and preferably to call in their loans. The response on a project-to-project basis from the individual banks was vastly different.

On the Taupo Huka Falls project, from early 2008 the ANZ moved to a very pro-active credit management

General


General

programme. This involved various parts of the bank working with the developer in a very close manner and agreeing approaches to reduce expenditure in a controlled fashion. The tightening credit actions were discussed together at length and agreed programmes put in place that, while tough at the time, were workable. We put in place actions agreed by the bank, which the purchaser market was oblivious to.

Tightening creditThe changing credit conditions at Kensington Park Orewa were quite different from the developments in Taupo. The tightening of credit conditions from August 2007 had meant my investors and I had already provided the on-call capital of $10 million. Then with the fi rst and second mortgage tightening credit conditions and the reluctance to fund infrastructure costs, it meant a total of $32.1 million of equity was provided by early 2008. We thought this would be enough, as from April to June 2008 saw the completion of two large stages and approximately $30 million of settlements were completed. Both stages were all pre-sold with all units settling. This reduced the fi rst mortgage fi nance from $73 million in early 2008 and 55 per cent LVR, to $42 million and 39.5 per cent LVR by August 2008.

However it was the bank’s continuing tightening of credit conditions which was the downfall of most of the developers. The BNZ insisted on receiving a personal guarantee on the land loan facility from my passive investors, otherwise they would not roll-over the $29 million facility. This was despite the bank having been provided with a 20-page shareholders agreement at project commencement in early 2006, which expressly stated that the three shareholders would not provide guarantees under any circumstances. At my bankruptcy hearing, the bank acknowledged receiving the shareholders agreement as part of the information provided formally to the bank,

before advancing any funds, but stated that this document was not part of the formal loan contract documents.

Mixed results The fi nance institutions that proactively managed their exposures have fared best in the unprecedented international fi nance conditions which have affected New Zealand property. The ANZ have managed the Huka Falls project very carefully, and even though the Kensington Group collapsed, there has not been one visible sign of distress on-site due to careful management. The ANZ’s exposure was reduced, and February 2010 they were fully repaid. The second mortgagee is now in control of the project proceedings and will probably recover all of its borrowings.

Putting large projects into receivership has seen mixed results. In most cases receivers have been focused on following a process. A large project has momentum and a large part of purchaser goodwill, so stopping a project and often losing all the pre-sales is always likely to lead to heavy losses for everyone.

We pleaded with the BNZ to not put Kensington Park into receivership, and we provided three alternative rescue plans. The last of these had the fi nance institutions in full control, but ensured the land loan was renewed without personal guarantees from passive investors, and the pre-approved $20 million of bank funding was provided to complete $45 million of property, $41 million of which was pre-sold. The bank refused and placed the project into receivership.

The receivership process is often disastrous for everyone except the receivers and lawyers. Kensington Park Orewa was eventually sold, with all the $45 million of pre-sales expired, and to the only party who was not reliant on any bank fi nance, for a fi fth of the earlier registered valuation. The total receivership costs were $6.3 million. Unless the receiver on a project actively manages it, the results are bad for all.

What about the property developers?Some developers who had completed projects before mid-2008, or who had exited the market before then, have survived. Most of these developers are currently dormant with very little entrepreneurial activity. They may resurface in better market conditions.

Most of the multi-unit residential developers who had projects under development in 2008 are in various forms of distress. Some might say that some of the developers had it coming and that the industry is possibly better off without them. But it is probably the widespread developer carnage which has taken many by surprise.

How many industries can prosper long term when it loses almost all of its participants at the same time, many of whom have so much experience? This is probably a major structural weakness within the New Zealand


property development industry. While the bank’s literature and marketing all boldly pronounce ‘we are your business partner’, the reality is that when the going gets tough a number of the banks are only interested in themselves.

The Australian REIT’s were very aggressive in the New Zealand commercial, industrial and retail markets from 2002-2007. The global fi nancial crisis has caused major funding tightening for these REITs and most have been sellers of some of their properties. The higher leveraged New Zealand funds have also been in some distress, forcing these entities to sell property and reduce debt. This has meant that the private high net wealth investors have had the purchasing investment market to themselves during the last two to three years.

These private investors had been outbid by the public investors in previous years, but they have fl ourished in recent times. Many of these investors are not developers, so do we need property developers in this country?

Will property developers be needed in the future?Commercial, industrial and retail property has often featured investor-owner developers. While many of these entities have had a tough time in recent years, most of them have survived. All the large New Zealand public funds have survived, mainly because their shareholder charter requires low levels of debt to value. The Australian REITs who struggled most were those with large

borrowing and higher leverage. Future conditions for proactive New Zealand public

entities will probably be quite good, as land prices have reduced and there has been very little development activity. So as the market picks up again in coming years, we do not have much vacancy in the main investment sectors. This is quite different from the high over-building in previous cycles in the late 1980s.

A number of private commercial developers have survived the downturn. Their activity levels have been subdued, but these entities are likely to bounce back quickly as the market recovers. Many are solely focused on commercial property development, and while having dabbled in residential property, will probably be hesitant to re-enter that market.

The large-scale residential land sub-dividers are also in good shape, being controlled by a few large groups who have deep corporate pockets. But many councils are favouring intensifi cation over greenfi eld development.

It is in the multi-unit residential market that there appears the biggest gap. Almost all the developers active in this market have been decimated. However Auckland Council has a major project to increase residential intensifi cation, and Christchurch’s re-building will involve a substantial amount of mixed-use and multi-unit residential. So why would someone else want to re-enter that market with all the previous carnage?

General General


Multi-unit residential developers Many of the multi-unit residential developers that got into strife in 2008 will probably not re-appear to do more multi-unit residential. With the elimination of the second mortgage fi nance markets, the mutual dislike between global fi nancial crisis affected developers and banks, and the bank’s harsh conditions on multi-unit buyers, makes this proposition unattractive to the now wiser entrepreneurs. While it has been said many times before the global fi nancial crisis that you cannot trust the banks, the receipt of a bout of their punitive actions will make you think twice before lining up for similar treatment.

A number of young exuberant new entrepreneurs will probably step forward and have a go. What is really frightening is that there are green sprouts of bank salesman and fi nance brokers now active, promoting the same marketing messages to budding young property developers that they were peddling 10 years ago. They are offering deals, but with all the onerous fi nance conditions the banks will impose, the young entrepreneur will not understand their effect.

A young inexperienced developer approached me recently in excitement at being offered fi nance on a project. He wanted my thoughts on the offer. He had substantial equity which was his main benefi t. My comments were that if every market condition went in his favour, he should be fi ne. However the fi nance conditions he was being asked to commit to were so onerous that any movement in market conditions would leave him very vulnerable.

It appears to be a good time for a major invasion from large Australian multi-unit residential development companies. Multiplex Living are already established in New Zealand, although currently quiet. Mirvac have been in New Zealand and will probaly look to re-enter. FKP are already present here and Austcorp, Australand, Lend Lease, Stockland and Meriton would also have an eye on this country if there were favourable market conditions.

Kensington Properties was carrying out extensive due diligence with one of the above in 2006, which would have seen them purchase Kensington. We agreed to defer the negotiations for two years as we could not agree to fi nal terms. I should have sold. The main issue for these Australian companies entering New Zealand is to have local expertise and experience.

The next 10 years?The next decade will require a much smarter development than the weaker developers could get by with in the last cycle. Poor urban design and building standards are a thing of the past. A strong grasp of high quality urban design and green building fundamentals will be minimum requirements. Much more stringent building standards will be good for customers, but place

General

extra burden on novice developers. All of the above will be good for the industry.

Finance conditions are going to be stringent for some time. Developers will need to be well capitalised. The barriers of entry to the property developer market will be higher than they were in the previous decade. Strong development expertise, experience and local skills will still be a strong requirement. As long as the developer has integrity, there will be a strong source of private capital available for good opportunities. It is private capital that will probably replace the gap left by the demise of the second mortgage fi nance markets. Experienced property developers with a strong knowledge of local market conditions may be able to agree to partnerships with land owners, and by working together will have the ability to substantially reduce fresh capital requirements for the developer.

Australian multi-unit residential development companies will undoubtedly have a large role to play in New Zealand in the next 10 to 15 years. However in all regions worldwide development expertise is extremely diffi cult to export and local knowledge will be vital. The think global – act local slogan will be relevant, with international experience needing to match local expertise.

What to optimiseI have had a large amount of support from many in the industry over some fairly testing times. For all those that provided support, I will be forever grateful. Some wise heads who were treated harshly in the late 1980s told me early on ‘It will not be for what has happened that you will be judged, but in how you respond’.

After a long period of trying to help creditors, my main aim has been to work hard with integrity and to try not to be bitter. I have helped John Sax with Kensington Park, and am very pleased that he has successfully continued the master plan concept with very little change. Having no debt helps with proceedings. I am now working with others providing property consultancy for tenants, providing consultancy on large-scale developments, and also for the Auckland Council with the Auckland Plan.

I will not provide personal guarantees to loans in future. The fi nance entity will maintain that it is to ensure the borrower stays focused, when the bank is aware of your personal fi nances before project commencement. When these do not change during the project you would think that the fi nance entity should share responsibility for events beyond equity and full resources. The American non-recourse loan system has much appeal.

I am optimistic for the future of good quality New Zealand development in the next 10 to 15 years. High quality urban design will be the key to building the urban fabric we can all be proud of.

General



Simon Mortlock

Christchurch updateInner city kick-start

An inner city development and investment corporation could provide a useful role in kick-starting inner city renewal in Christchurch. Such a corporation could fulfil a series of roles including advisory services, raising investment capital, initiating amalgamation of properties for comprehensive development and undertaking development.

Christchurch update

The corporation could be established by the Christchurch City Council as a subsidiary of its investment arm Christchurch City Holdings Limited. The council already holds land capable of development within the CBD, most of which was acquired from the Henderson Group. This land could be assigned to the corporation to establish its initial capital and property base. However, its main source of funding should remain the private investor providing capital by equity float or bond issue.

Four main rolesThe corporation should undertake four roles. First, it should provide advisory services to property owners within the inner city planning and undertaking their development. Services could include contracting geotechnical experts, structural engineers, architects, urban designers, retail planners and regulatory personnel. It would provide property owners, particularly those with limited development experience, with the necessary support to redevelop their properties for housing and small businesses. It could provide that advice in support of the vision promoted in the Central City Plan. The advice should not adopt a prescriptive or regulatory approach but rather one that identifies opportunity, reflecting a business-friendly involvement which showcases Christchurch as a great place to do business.

The corporation’s second role could promote and develop outline

Christchurch update

development plans on a city block-by-block basis, providing design and market solutions which would support the development of each block as if it were one development. It could work with the council to create lanes within each city block. It could support the establishment of public car parking behind buildings within the centre of the block that might be held under common ownership. It could work with council in fast-tracking technical and regulatory approvals.

Thirdly, the corporation could provide the necessary leadership and support required to amalgamate small property holdings under one common ownership. It could be the means by which capital is raised to invest in the development along with property owners.

Finally, the corporation could, alone or conjunction with others, undertake development to showcase property investment opportunities along with the benefits of good design in support of the city’s vision.

Walking a fine lineA corporation such as this would need to walk a fine line. On one hand it should not usurp the role of the council, nor should it replace or undermine the private sector. The corporation’s role would not be to take market share, but rather to support market growth. It should be seen as an honest and reliable partner for private property owners to work with.

The corporation similarly needs to work with the council, but not take over its role of roads, green space and car parking facilities. The council’s critical focus remains the need to create infrastructure within the inner city to support the rebuild. It is not the council’s role to undertake property development − it does not have the capital or the technical resources.

There may be a reluctance, particularly over the next five years, for the private sector to invest in the Christchurch inner city. There will, therefore, probably be a significant shortage of investment capital to undertake the complex task of developing land block-by-block and generally promoting the vision. With a reasonable level of capital the proposed corporation could, however, become a more acceptable investment opportunity. Property owners, unable or unwilling to develop their own properties, might see as it as an opportunity to transfer their properties to the corporation. This would be in exchange for a shareholding as a means of fast-tracking their investment in the rebuild of the city.

It would be important to appoint people to the corporation’s board and employ senior management who have the requisite development and business experience. Its advisory services could largely be undertaken by contracted professionals offering their services on a user-pays basis. Private property owners who use these services would have a greater degree of confidence that the

requisite expertise was available and on terms that were competitive and timely.

There is one further function the corporation could play. The provision of affordable housing within the inner city will probably be an important ingredient in increasing the numbers of those living within the inner city. The experience of the New Zealand Housing Foundation in making affordable housing available in Auckland demonstrates that such an approach can produce good housing communities.

Public private partnershipThe corporation would produce a public private partnership mix that would develop opportunities for the private sector while working with the council and the government. There are a number of overseas examples of what might loosely be called integrated developments. The Melbourne docklands is a new waterfront precinct next to Melbourne’s CBD. It is a large urban renewal project and Australia’s largest construction project.

This vibrant destination is being developed in stages with a vision to create a sustainable mixed use where people can live, work and visit. Currently there are 6,000 residents. On completion of Melbourne docklands it is expected to become a home for 17,000, and a workplace for 40,000 people. Melbourne docklands is an example of a successful private public partnerships.

A second example is Westwood, Adelaide. This is Australia’s largest urban renewal project, located seven kilometres north west of Adelaide’s CBD. The $600 million project began in 1999. It is a joint venture between international developer, Urban Pacific Limited, and the Department of Families and Communities, in conjunction with the city of Port Adelaide Enfield and the city of Charles Stuart. Westwood is transforming this area of Adelaide into a vibrant and sustainable urban environment which involves replacing and upgrading older public housing stock with new stock and a better ratio of public and privately owned homes.

Other examples are the Brisbane Housing Company in Queensland and the City West Housing in New South Wales. Each project demonstrates the important role played by public-private partnerships in promoting private sector solutions.

CBD red zoneThis all needs to be seen in the context of what now exists within the Christchurch CBD red zone. A recent visit to the red zone revealed vast empty spaces. Few buildings remain, particularly on the east side of the cathedral between Manchester Street, Madras Street and Barbadoes Street.

Now the people of Christchurch have spoken in large numbers that they want the inner city to be a place

Christchurch update


where people live, work and play. Their vision is of a city within a garden. This is not surprising given the city’s long history and the Botanical Gardens which showcase the city’s natural beauty.

Inner city, high density urban development is an important part of the city’s urban development strategy. This, however, is against a background of limited urban development. As a city we struggle with what will encourage and enable property owners within the inner city to redevelop their properties, particularly for housing and small businesses, and what will attract buyers and tenants to regard property within the four avenues as a preferred place to live and work. We have the vision, it is now a case of translating it into a development process that meets market demand.

A good example of low rise affordable housing, with excellent design and use of space with great street appeal is in Portland, Oregon illustrated in the photograph below. This is brownfield development which should appeal to new city dwellers but requires a whole of street approach that individual landowners support.

Many unknownsLandowners need a realistic assessment of the development potential of their land. What has a geotechnical report revealed about the stability of the land? What foundations are required? What is capable of being built? What is the market value of the land? What is the earning potential of any development? These questions are particularly difficult to answer with limited physical and market evidence.

The land is probably worth less then it was previously, reflecting development difficulties and a time-scale to develop the land. There is so much land which awaits development, with limited knowledge as to when the market will respond. Property owners want to know if there will be tenants for their commercial premises, what rental can be obtained and if there will be buyers for homes. They are also asking what an acceptable purchase price will be, and if the rebuild can be successfully achieved from a financial perspective.

When you run down the list of what needs to be worked through in a complex physical and financial environment where there are few signs, it is no wonder property owners within the four avenues, particularly those who have small holdings and no experience at development, will need all the support local government and government can offer. This is especially in the advice and decision-making process. The proposed corporation can assist in this process.

What does a kick start look like? This is when there is raised expectation that the city can produce its vision. It is when the public spaces, the responsibility of local government, reflect that vision. It is when at least one block has been successfully developed demonstrating what can be achieved.

Most importantly, it is that point in time when those looking for homes and new business premises see property within the four avenues as their preferred location. It will have the right mix of public amenity values, an attractive

streetscape, walkways, green space, plantings, local shops, security and affordability. It will have social services close at hand such as the local library, the crèche and the school.

For those who do not live in the Garden City it may be hard to imagine the extent of the devastation within the inner city and the scale of the rebuild. There is, however, a strong sense of hope that the inner city can be rebuilt better then it was and that it will become the home for 30,000 residents. The city has a huge opportunity, dependent on its population supporting the vision that they have so eloquently described. By making investment decisions and lifestyle decisions they will produce the reality.

Simon Mortlock – Mortlock McCormack Law, Christchuch

Christchurch update


Alan Stewart

Property overview Effect of earthquakes on Christchurch City

Christchurch update

Government payout scheme The government payout scheme in Christchurch is on the basis of the rating valuation as at August 2007 under the following options.• Option A – take the 2007 rating valuation as full and

final payment• Option B – take land value of the 2007 rating

valuation and negotiate a settlement with an insurer for house remediation or replacement payout.

The perceived shortcomings of the above payout include the following considerations. The market value statistics as at August 2007 confirm that the rating valuation is often well below the market value level at that time. The owners most at risk are those with minor damage to their dwelling in the red zone. There is no ability to negotiate a further payment from the insurers for their dwellings with minor damage, and their only option as the scheme stands is to take the rating valuation of 2007 as final payment. In addition, there is no mechanism to ensure that the payout is market value related as fair compensation.

A suggested solution is to set up an independent appeal panel using two senior public valuers appointed by the local president of the NZIV. The panel would have the power to adjudicate on settlement for cases as above being market related.

Additional residential sectionsCERA is fast-tracking the rezoning of land. Two recent examples have been the approval to subdivide a large block on the outskirts of both Halswell and Kaiapoi. A recently announced initiative, through a trust, is aimed at pre-selling sections to eastern red zone owners. This would cut out the developer’s margin and selling costs and achieve much lower purchase prices for the sections. This has yet to be implemented.

Where is the market?There is a general lack of sales evidence in areas most affected by the earthquakes, such as the eastern suburbs within the red zone and lower hill areas sustaining damage in the February earthquake. Generally in these areas there are very low volumes of sales. For example, recent analysis on the Cashmere hills showed only one sale had occurred around the $1 million price bracket since February 2011. Conversely, there is evidence of increased volumes of sales in the west and north west of the city and some evidence of price increases. However, in my view, that evidence is still somewhat inconsistent.

There is evidence of residential rental increases in the west and north west suburbs. For example, a recent case is in Northwood of a three bedroom modern single-storey home. This would have let six months ago at $400 a week but the current rental level is at least $450 a week.

Commercial relocation Increasingly, commercial tenants are relocating in areas such Addington, Merivale, Sydenham, and Hornby, and those areas are showing renewed vitality with those new tenancies. There is still a drastic lack of hotel beds within Christchurch city, remembering that Christchurch is acknowledged as the gateway to the South Island.

There has been a very positive response to the new Cashel Mall container shopping precinct. But there is increasing frustration at the delays in the rebuild of the inner city.

There are fewer aftershocks and generally lower level shakes. We look forward with renewed optimism to the phasing out of all earthquake activity and moving on with the Christchurch rebuild.

Alan Stewart is from Alan Stewart Property Services, Christchurch.

Christchurch update


Niven Prasad

Rent reviews in Glasgow leases Mandic V The Cornwall Park Trust Board (Inc)

A Supreme Court majority has decided that where ground rent in a Glasgow lease is to be determined as a percentage of the unimproved value of land, the unimproved value of land is valued according to the highest and best use of the land and without regard to any restrictions in the lease. In giving this decision, the Supreme Court noted that improvements should be valued as the residual of the unimproved value of land subtracted from the gross value of the property − the subtraction method.

Legal

This approach applies even where, structurally, the rent-setting provision asks for the improvements value to be subtracted from the gross value of the property to arrive at the unimproved value of land. The gross value of the property should not be restricted either by any lease restrictions. The Supreme Court effectively upheld the decisions of both the High Court and the Court of Appeal in this line of cases as well as previous authority on valuation methodology in the ground rent review context.

BackgroundThe Cornwall Park Trust Board entered into long-term ground leases with various lessees in 1910. The leases were renewable in perpetuity at 21-year intervals, with rent calculated as a percentage of a sum, namely the unimproved value of land. This formula was in clause 13 of the leases.

Clause 13(b) of the lease agreement provided −

… two separate valuations shall be made namely a valuation of the then gross value of the fee simple of the land then included in the lease and also a valuation of all substantial improvements of a permanent character made or acquired by the Lessee and then in existence on the land.

Clause 13(h) of the lease provided −

… a renewed lease of the said land at an annual rental equal to five pounds per centum on the gross value of the land after deducting therefrom the value of substantial improvements of a permanent character as fixed by the respective valuations as aforesaid.

The prescribed formula under the lease was therefore

Gross fee simple of land

− Value of improvements =Unimproved value of land

The lessees argued that according to the above prescribed formula in the lease, the improvements should sequentially be valued first before the unimproved value of the land.

The majority of the Supreme Court decided that it is necessary to take an ‘added-value’ approach towards valuing improvements. Therefore it would be incorrect to value the improvements without deriving part of its value from the relationship between the improvements and the land. As the majority of the Court stated at para 65: ‘An added-value approach is intrinsic to the concept of improvement. If work done does not add value it is not an improvement.’

In response to the inconsistency this would create when compared to the prescribed formula in the lease, the Court said at para 62 that ‘we do not see that it matters that, as part of the improvements valuation, the valuer has assessed a value for the land as if unimproved, which corresponds, by reason of arithmetical necessity, to the residual value against which rent is calculated.’

This added-value approach to valuing improvements is derived from the concept that improvements have no value beyond the extent to which they enhance what would have been the value of the land had they had not been there. In addition and significantly, the leases imposed certain obligations and restrictions on the lessees. Most relevantly, unless the consent of the lessor was obtained, lessees could not erect more than one dwelling on the land or use the land for otherwise than residential purposes. The minority, Chief Justice Elias, decided that lease restrictions were relevant because they were similar to a covenant running with the land and that the lease restrictions should be taken account of for a fair rent.

Legal


Legal

The majority of the Court rejected this argument citing the case of Cox v Public Trustee [1918] NZLR 95 (SC) as authority to ignore the lease, but also added in its reasoning that the leases were never intended to calculate a ‘fair rent’. In response to the lease restriction being similar to a covenant, the majority explained that the ‘rent-fixing process is envisaged as taking place at the expiry of the lease and at the commencement of the renewed lease, and not in the context of a continuing lease.’

Case historyThe Mandic case has a case history dating back to the High Court. The lessees first applied for declarations that the effect of clause 13 of the Cornwall Park leases is to arrive at a residual value of the land as actually occupied by the existing improvements on the land or on the basis for the land’s use for a single dwelling according to the lease restriction. The High Court found in favour of the lessor, dismissing the relevance of the lease restrictions to the unimproved value of the land. In doing so, the Court applied the Cox case.

The Court of Appeal dismissed the appeal by the lessees and went even further than the High Court by saying at paragraph 49 of its judgment that the highest and best use approach to valuation was appropriate at all stages of the valuation process. The Mandic Supreme Court case came about as the case was appealed a second time from the Court of Appeal.

Supreme Court – minority judgmentThe minority judgment of Chief Justice Elias agreed with the majority in all aspects, except on the point whether lease restrictions were relevant in fixing the gross value of the fee simple. In the Chief Justice’s judgment, restriction to use in the lease is material to the valuation of land.

The Chief Justice’s reasoning was that the lease restrictions were like covenants on land restricting use. Following that reasoning, Chief Justice Elias said that ‘if the covenant runs with the land, it is a restriction relevant to the value of the fee simple. The position is not different because the restriction is contained in a lease rather than being a covenant registered against the fee simple.’ Elias explained that this interpretation fits in with the objective intention of the parties to set rent within that restrictive context.

The Chief Justice agreed with the majority on the sequential approach issue. Elias explained in paragraph 11 of her judgment that starting with an assessment of the unimproved value, which is also the residual value at the end of the exercise, is permissible. The Chief Justice cited the decision of Thomas v Valuer-General [1918] NZLR 164 where the Court said that ‘if the result is right, does it matter whether the valuer adds from the top or the bottom?’

Lastly, Elias decided that the gross value of the

property should not be constrained by the existing development on the land. Any such constraint would deny development potential where the existing development is not ‘highest and best use’ and consequently deny the lessor the benefit of increase in the value of land.

Supreme Court majority judgmentThe majority in the Supreme Court framed its decision around three questions which corresponded to the lessee’s three main arguments −• Are improvements to be valued on an added-value

basis, and if so, can subtraction methodology be employed?

• Is the assessment of gross value constrained by use restrictions under the lease?

• Are the required valuations constrained by the state of the land as occupied by improvements?

In short, the answers to the questions are yes, no and no. However, to provide a better understanding of the reasoning, the main points relating to each question are discussed briefly below.

Are improvements to be valued on an added-value basis, and if so, can subtraction methodology be employed?Improvements can be valued on an added-value basis and, as a result, subtraction methodology can be employed. In answering this question, the majority dealt with first, the lessees’ argument that the subtraction method is inconsistent with the structure of the formula in the lease. Instead, the lessees argued that the improvements should be valued first using a depreciated replacement cost method. Otherwise the value of the improvements would be ‘squeezed’ and the lessees would be paying rent on a higher proportion of the unimproved value of the land.

The Court rejected this argument at paragraph 45 of their judgment because, fundamentally, ‘Improvements cannot (at least usually) be sold otherwise than as an integral but undiscriminated part of the land to which they are attached.’ It is therefore an arithmetical necessity to value the improvements as a residual value to acknowledge the value-enhancing nature of improvements and not merely a ‘cost equals value’ characteristic. In reaching this conclusion, the Court supported its reasoning once again by showing consistency with the Cox case, the economic substance of these kinds of leases, and the structure of contemporary valuation legislation.

The Court however acknowledged that there is still a place for a depreciated replacement cost approach in this context. At paragraph 60, the Court recognised that ‘where there is limited or no direct market evidence in relation to unimproved land and the land has been developed in accordance with its highest and best use, the valuer might rely primarily on that current depreciated replacement cost.’


Legal

In accepting this added-value approach, the Court stated that the subtraction method is a ‘necessary corollary’, because if the improvements are said to have added value to something, then that something is necessarily the unimproved land.

Is the assessment of gross value constrained by use restrictions under the lease?The majority decided that the gross value is not constrained by use restrictions under the lease because −• As a matter of plain English, it is ‘extremely diffi cult to

construe the phrase “gross value of the fee simple of the land” as incorporating restrictions on use provided for in a lease.’

• The rent fi xing process is envisaged as taking place at the expiry of a lease and not in the context of a continuing lease

• The Court in the Cox case was clear that the lease was to be ignored. The relevant passage from Cox reads that ‘in addition to excluding mortgages and charges from consideration, the existence of the lease must also be put out of account. The very object of the provisions for valuation requires this qualifi cation.’ The Supreme Court majority in the current case put great weight on the Cox case because the lease provisions were substantially similar and the Cox case had been referred to and relied on in many subsequent cases. In the Supreme Court majority’s view, Cox was the settled law and ‘it would be unacceptably destabilising if this Court were now to adopt a different approach.’

• Unlike the Chief Justice, the majority state in paragraph 79(a) of their judgment that it is clear that ‘the rent-fi xing process was not intended to provide a fair rental formula allowing for the existence and terms of the lease.’

Are the required valuations constrained by the state of the land as occupied by improvements?The valuations are not constrained by the state of the land as occupied by improvements. The Court dealt with this point briefl y because the reasons were similar to those discussed in relation to other questions raised by the case, particularly the discussion around overall scheme and

purpose of the leases.The Court summed up its reason for disregarding

the ‘as occupied site basis’ by saying at paragraph 81 that the ‘the whole point of the exercise is to provide the lessor with a return calculated on a valuation of the land which excludes that portion of the value which has been contributed by the lessee in the form of substantial improvements of a permanent character. In applying the added-value approach, it is clearly the net value enhancement of the improvements which provides the measure of their value.’ Such an approach in the majority’s opinion left no room for constraints imposed by an ‘as occupied site basis’.

Implications for valuation methodologyThe Court’s reasoning moves emphasis away from the sequence of the prescribed rent formula towards a focus on the nature of the items in the formula. It is clear that even though the unimproved value of land seems from the formula to be the desired end result, the economic substance and scheme of ground leases demands that vacant land according to a highest and best use approach should be valued before any value of improvements can be derived.

In giving this decision, the Court in its majority gives further weight to settled precedent stemming from the Cox case through to the previous Mandic cases. The disputed and litigious nature of perpetually renewable leases is further illustrated by past enquiries into the subject. The Royal Commission report, chaired by Sir Michael Myers in 1948, and the Lusk Ministerial Inquiry into Certain Perpetually Renewable Leases in Auckland in 1993, are other examples of examination into the nature of these types of leases.

For now, the highest court in the country has given its verdict, setting an important precedent itself on how to interpret the rent setting provisions in perpetually renewable leases. This last episode in the Cornwall Park leases saga provides a signifi cant learning on the subject in New Zealand.

Niven Prasad is a commercial property solicitor for Simpson Grierson.

leases saga provides a signifi cant learning on the subject in as occupied by improvements. The Court dealt with this point briefl y because the reasons were similar to those discussed in relation to other questions raised by the case, particularly the discussion around overall scheme and

Niven Prasad is a commercial property solicitor for Niven Prasad is a commercial property solicitor for Simpson Grierson.Simpson Grierson.


Niven Prasad

Ambiguity in sale and purchase agreement Stake Property Limited V Coate & Ors

The High Court decision of Stake Property Limited v Coate & Ors highlights the importance of clear descriptions in sale and purchase agreements and the importance of clear communication to and from real estate agents. The High Court refused to grant specific performance of a sale and purchase agreement because there was too much ambiguity in interpreting the agreement. A dispute arose about whether the agreement included the sale of a single dwelling or the sale of two cross-leased properties.

Legal

The Court cited the case of Krukziener v Hanover Finance and said that ‘the Court must be left without any real doubt or uncertainty’ that ‘the defendant has no defence to the claim’ in a summary judgment application. The facts of the Stake Property case left too much uncertainty for the Court to grant a summary judgment application.

BackgroundThe defendants were the trustee owners of two cross-leased properties at 39 Maich Road and 9 Corin Avenue, Manurewa. Originally, only 39 Maich Road existed and was converted into two flats in the early 1980s. The land was subsequently subdivided into two cross-lease titles for the separate flats, which became the addresses 39 Maich Road and 9 Corin Avenue. The defendants in this case wanted to only sell 39 Maich Road and not 9 Corin Avenue.

The order of events leading to the sale of the property was as follows.1. The defendants listed the property with a real estate

agency. The listing report said ‘Please note 9 Corin is not for sale. The sale is for the two flats at 39 Maich Road (house conversion).’

2. The real estate agent sent an email to his client base, including the purchaser, advertising the property: ‘Check this new listing out. 2 flats (separate titles) for sale at the 1 price of $329k! 117 & 134 m² floor …’ This email attached an aerial photograph outlining the whole of the freehold (cross-leased) land outlined.

3. The agreement itself described the property as follows −

• AddressasUnit1&2,39MaichRoad, Manurewa

• EstateasCrosslease(feesimple).Allother descriptions including ‘Crosslease (Leasehold)’ were crossed out

• LegaldescriptionsincludedreferencestoFlat1, Flat 2 and garage

• Certificatesoftitlewere‘103A/410&103A/409’.4. Once all signatures were obtained, the agreement was

declared unconditional by all parties. The plaintiffs had not been inside any of the flats at 39 Maich Road or 9 Corin Avenue before the agreement went unconditional.

5. The purchasers and the agent visited 9 Corin Avenue and were met by a confused tenant who contacted the vendors. The vendors asked the agent and purchasers to leave the property immediately.

6. The real estate agency acknowledged that its instructions had been to sell 39 Maich Road only. The parties all met to resolve the issue but the purchasers insisted they get both properties while the vendors denied any obligation to sell both.

JudgmentThe uncertainty in interpreting the agreement was enough to dismiss the plaintiff ’s application for specific performance. However, the Court also agreed with the defendant’s submissions that they had an arguable case for the uncertainty voiding the agreement.

The Court also agreed that it was arguable that there could be a plea of non est factum by the defendants. In other words, the plea means the defendants signed an agreement which they thought had a particular character but the agreement in fact had a contrary meaning. A finding of non est factum was dependent on greater examinations of the facts. There was enough uncertainty in the facts to make the finding at least arguable by the defendants.

Continued on page 19 >>



Chris Stanley

International Valuation Standards 2011

The International Valuation Standards Council (IVSC) recently issued new international valuation standards – IVS 2011. In New Zealand and Australia they will become operative from 1 January 2012. The 2007 standards, applications and guidance notes, which are incorporated in the Australia and New Zealand Valuation and Property Standards, are no longer applicable after 31 December 2011.

General

The effect of the global fi nancial crisisThe 2008 global fi nancial crisis was the main impetus for the new standards because it raised awareness of the importance of valuation. As valuation provides an essential underpinning to the global fi nancial system, the IVSC was needed to develop better tools that will reduce the chances of another crisis.

The crisis revealed a number of systemic weaknesses in the practices of fi nancial institutions and governments, leading to calls for greater transparency, accountability and consistency.

In response to this need the International Valuation Standards Board published an ‘exposure draft’ for the new standards in June 2010 and asked for feedback from organisations and individuals around the world.

The main objective of the new edition of IVS 2011 is to boost confi dence in the valuation process for business owners, investors, lenders and others who rely on the valuations for investment and other fi nancial decisions. The standards aim to bring consistency and transparency to the main input assumptions, models and processes involved in valuation. This is what global markets increasingly demand and it is vital to restoring investor confi dence.

The IVS 2011 represent a signifi cant change from IVS 2007, and they are principle-based to enable them to be applied as widely as possible. The previous standards were considered too prescriptive and detailed for practical application across a wide range of global valuation practice.

General

Three series approachIVS 2011 is divided into three series with an overarching IVS framework. The framework sets out generally accepted concepts and principles that underlie valuation and it covers −• Independenceandobjectivity• Price,costandvalue• Markets,marketactivityandmarketparticipants• Valuationbases,additionalassumptionsandspecial

assumptions • Valuationapproaches.

The 100 Series comprise three general standards which lay down procedures that should be common to all valuations, things that need to be −• Agreedinthescopeofworkwiththeclient(IVS100

Scope of Work)• Donewhenactuallyconductingthevaluation(IVS

102 Implementation) • Reported(IVS103Reporting).

The 200 Series comprises five asset standards that focus on specific issues that need to be considered when valuing different types of assets − • IVS200businessesandbusinessinterests• IVS210intangibleassets• IVS220plantandequipment

• IVS230realpropertyinterests• IVS233investmentpropertyunderconstruction• IVS250financialinstruments.

There are various projects underway to add to this list, including possible new standards on extractive industries, forestry and liabilities.

The 300 Series currently has two application standards that focus on −• IVS300valuationsforfinancialreporting• IVS310valuationsofrealpropertyinterestsforsecured

lending.

Extra helpIn association with the new standards, the IVSC is developing technical information papers which will provide more specific guidance on specific valuation issues. Examples include discounted cash flow valuations and the cost approach.

The Property Institute of New Zealand and the Australian Property Institute are working together to review our existing guidance notes to incorporate and align with the new standards. An education programme is also being developed to help members. Members can view IVS 2011 online at www.ivsc.org.

ReasoningThe Court decided that while there was no ambiguity in the address, there was clear ambiguity in the legal description in the agreement. In particular, references to flats, half-shares, and to two separate titles were inconsistent with the deletion of the words ‘crosslease (leasehold)’ from the agreement. The reference to ‘garage’ in the agreement also added to the inconsistency as there was no garage in the title to 9 Corin Avenue.

The selling price in the agent’s marketing email was $329,000, which was significantly lower than the combined rating valuation of both properties. While the Court did not expressly indicate what this meant for the context of the agreement, they hinted that it was an indication that only one of the properties could be subject to the agreement.

Furthermore, the marketing email sent by the agent referred to ‘2 flats’ but ‘separate titles’ with reference to floor areas for both dwellings. Given the

listing report where the defendants’ explicit instructions were not to sell 9 Corin Avenue, it was arguable that the real estate agent acted outside the scope of his authority. A third party claim by the defendants has already been issued at the time of this case note.

Overall, ‘the uncertainty in the language of the agreement requires the Court to be clear about context. The context cannot be established sufficiently on this summary application.’

Although this was a rare situation where the vendors owned two adjoining cross-leased properties, the case shows that certainty in legal descriptions and addresses should always be checked to be consistent. To avoid any confusion and disputes, clear communication between the vendor, purchaser, real estate agency and the agent should always be established early on.

Niven Prasad, Solicitor, Simpson Grierson

<< Ambiguity in sale and purchase agreement – continued from page 17



Abandoned land tender by the Ruapehu District Council

Recovery of unpaid rates was recently achieved by the Ruapehu District Council earlier this year. This was the sale by tender of 23 properties de-clared ‘abandoned land’ from court orders obtained under sections 77 to 83 of the Local Government (Rating) Act 2002 . In May 2011 the council applied to the District Court at Taumarunui to declare 23 properties abandoned. In each case, the ratepayer had allowed rates to fall substantially into arrears, so the council sought orders for it to sell or lease each property to recover the outstanding amounts.

General

Ian Campbell

Strong demandThe abandoned land tender was widely advertised and closed on 21 July 2011. The tender attracted strong demand, with 134 offers for the abandoned properties situated throughout the Ruapehu District. This was the fourth abandoned land tender conducted by the Council to date, with 19 of the 23 properties subsequently sold.

The properties for sale were a mixture of vacant residential and improved residential property along with pastoral land and a forestry block situated in the townships of Ongarue, Ohura, Owhango, Manunui, Raetihi and Waiouru. Tendered properties passed in would either be subject to further negotiation or offered again at a later date.

The abandoned land tender was applied on properties whose rates had remained unpaid for three years or more, but generally this was fi ve years and often up to 10 years. Usually ratepayers were unknown by the council or could not be found, were deceased, or had given notice to abandon their land with rates still owing. In some cases the rates owing on the land may have exceeded the market value of the property. To avoid a spiralling problem, local authorities can intervene and seek recovery via the courts declaring the land abandoned and authorising the council to arrange sale or lease of the land.

General

In a media statement by the Ruapehu District Council, 19 tenders were accepted, the highest being $22,500. Properties situated in Ohura had also been sold with a price range from $20,000 to a low of $250. In addition to recovering unpaid rates, one of the main objectives was to bring new ratepayers into the district. The council successfully recovered $155,236 in the latest tender process.

Tender resultsSale transactions of the abandoned land tender can now be revealed. A sample of 10 tender results is shown in the table below. Included are both July 2008 and July 2011 rateable values, land area, land use and if the parcel included a dwelling. Note that sale prices include GST.

The properties reviewed here achieved sale prices ranging between $400 for a 1,012 square metre vacant residential section up to $20,000 for a 2,837 square metre section with dwelling in Ohura.

Results indicate that successful tenders met or exceeded the reserve prices set by the council. They confirmed that all 11 properties in Ohura had been sold with a price range from $250 to $20,000, with the average sale price being $4,144. Strong interest in the tender may have contributed to this result. Interestingly the sale prices may not necessarily cover the amount of rates owing on the property.

Sales in Piriaka, Mananui and Waiouru of around $15,000 indicate a discount to the market and were far less than the 2008 and 2011 rateable values. At the time the tender was advertised, the market conditions prevailing in the district were soft. In addition, the physical condition of some properties and encumbrances on the title meant that tenderers would need to have factored all of these into their final offer. The proceeds of sale were credited against both local and regional authority amounts due. Any shortfall in rates was written off and any surplus returned to the current owner.

Abandoned land or rating saleThe abandoned land tender process appears to be an effective way for managing recovery of bad debt for the council. An alternative method is by rating sales under section 67 of the Act. One of the main differences between abandoned land sales and rating sales is that rating sale properties are sold by the Registrar of the High Court.

The council can act under instructions from the Registrar to implement the sale process. In some cases with rating sales people may still be known by the council and working or occupying the land subject to the rating sale order.

Tender processThe tender process was conducted at the discretion of the Ruapehu District Council. Tenderers were invited to submit their offer by way of a binding memorandum of contract contained in the tender documents, together with a 10 per cent deposit to be later applied at settlement.

Successful tenderers were entitled to a transfer of the property together with a copy of the sealed order from the District Court. The tender needed to state a fixed sum, including GST, in the offer. The property was subject to a reserve price set by the council, and under section 79(3)(a) the council can refuse any tender received.

A contract for sale and purchase for the amount of the successful tender would be formed when the Council had informed the successful tenderer (‘the purchaser’). Settlement would occur one calendar month following formation of the contract. Deposits were returned to unsuccessful tenderers.

Sample tender resultsAddress Town Land area hectares Type 2008 CV 2011 CV Tender result DwellingValley Road Manunui 0.5898 RV $98,500 $75,500 $15,000 -Miro Street Manunui 0.0787 RV $22,000 $9,500 $1,150 -Tanoa Street Piriaka 0.2023 RV $40,500 $36,500 $15,200 -Tuhua Road Ongarue 0.3363 RV $7,000 $6,500 $5,200 -Kereru Road Ohura 0.2837 RD $30,000 $27,000 $20,000 90 square metresKiwi Street Ohura 0.1012 RD $44,000 $40,000 $15,000 90 square metresKakapo Street Ohura 0.1012 RV $1,000 $800 $400 -Ngarimu Street Ohura 0.1012 RV $1,000 $800 $800 -SH 49 Waiouru 0.0572 RV $54,000 $41,000 $15,000 -Ruanui Street Waiouru 0.0820 RV $54,000 $41,000 $14,500 -

Abandoned land at Manunui, Taumarunui


General

The Council was not required to point out any boundaries of any property and title was to be taken by the purchaser ‘as is’. This meant that the property when sold would be transferred subject to all existing encumbrances registered on the title. The council did, however, provide good information, aerial photographs and rating information for each property. An abandoned land tender sign was erected at each site.

Abandoned land for $400Tenders with ‘too good to be true bargains’ with hidden costs are often newsworthy. This is part of a Waikato Times article.

Ohura’s population has fallen from 3,000 to about 200, but there are hopes that a coal mine near the town will reopen and attract people to the area. In what may be one of the cheapest land deals going, a patch of abandoned bare land in the remote King Country town of Ohura has sold for just $400.

It could be a canny purchase if plans go ahead to reopen a coal mine near the town by the end of the year, with the potential for 60 new jobs. Ohura has seen coal mines, a prison and timber mills all shut down and the population has plunged from about 3,000 to about 200.

The Tatu coal mine closed in 1971, but it is believed there could be $1 billion of coal still there, if the company eyeing the mine can raise the cash to get it started again. The budget $400 section sold in Ohura had no reserve price. The town has become a popular tourist destination since the Ohura State Prison was transformed into accommodation.

were finally apportioned between both district and regional councils and credited against rates outstanding. Any remaining shortfall in overdue rates would be extinguished and the deficiency written off under section 82 of the Act.

Investigations and due diligenceAs part of any investigation and due diligence of a property, tenderers were advised to take extreme care when biding for any property. Inspecting the properties and gathering as much information before submitting a bid was essential.

Often there is a tendency to submit low offers, as seen with properties sold in Ohura. Owning a property can also result in a disproportionate holding cost for the new owner. Owners needed to budget for annual rates costs of an average of $1,700 to $2,000 along with management time, upkeep and travel for more of the remote sites. The abandoned land properties were offered vacant.

It pays to double-check to see who is using, occupying or grazing the land. One of the abandoned properties passed in was a 17.4 hectare rural block. The remote location and accessibility to the block may have contributed to this result, and having an undischarged mortgage still registered on the title did not help. A $400 vacant residential section in Ohura, for example, with a sizeable annual rating charge may prove uneconomic.

Tenderers should consider the general condition of abandoned land, drainage, water and sewerage services and the condition of any improvements on the land and deferred maintenance. Costs may be hidden in the property so a thorough research is required and a LIM is essential. Abandoned land and rating sales tenders are usually advertised by councils in their public notices and on their websites.

Purchasers were asked to have accepted notice of all encumbrances including restrictions, charges, easements, covenants and agreements when purchasing the property. Investigation into all aspects of the property, including legal issues, is essential when forming a bid. Tenderers were also reminded that the land may be subject to natural hazards and limitations under the Building Act 2004.

After payment by the purchaser of the balance of the price, the purchaser was then entitled to a transfer executed by the council under section 79 of the Act. Proceeds of sale

Abandoned land sign



Steve Tucker

Property investment goes high-techReal Estate Investar

As we head into the next property cycle we are seeing the re-emergence of the property investment educators, and this time we see a lift in professionalism and technology. In New Zealand, Real Estate Investar is currently leading the way with technology. The current look and feel of Real Estate Investar was established in Australia in 2008 and launched into the New Zealand market in 2011.

New technology

I sat down with David Hows, who is the brains behind the business, to fi nd out what it is all about and the effect this type of technology may have on the profession in the future. The marketing pitch is that they are a developer and provider of revolutionary real estate software and tools for property investors, and is designed and developed by property investors for property investors. It is a suite of tools in one place that can be accessed at any time and from anywhere.

Help on-screenThe tools are to help investors through every stage of the property investment process.• Search Intelligently searches live properties on the market using fi lters

specifi cally designed for property investors. This allows them to fi nd investment property opportunities that match their investment strategy in minutes.

• Value Helps get instant valuation estimates on almost any property online and make sure investors do not pay too much at purchase or sell below valuation.

• Analyse To calculate and compare immediate equity, added value on properties, estimated depreciation, after-tax cash-fl ow and capital growth to determine if a property is fi nancially viable. You can accurately forecast the

New technology

financial performance of property investments for up to 10 years.

• Research Do your own due diligence easily, analyse suburb performance trends, sales history, mapping, zoning and comparable sales in seconds to help make successful investing decisions.

• Track performance Track 70 performance aspects of each property in their portfolio. Maximise rental income, capital growth and simplify refinancing to optimise property portfolio, boost returns, maximise cash-flow and equity growth.

• Learn Learn or refresh knowledge on property investing by accessing an online knowledge centre. There are 27 property investment modules which include over 700 articles and 2,000 audio, podcast and video files designed and built to enable on-demand knowledge and support.

How does this affect valuers, who in the past have been a professional advisor to investors in the value and research aspect of this software? The answer to this may be in the detail.

SearchThis quickly and easily finds New Zealand real estate which matches your investment strategy before other investors. You can find −• Discountedandvendor-financedproperty• Positivecash-flow• Renovatableproperty• Developmentandstratatitledeals• Highgrowthproperty• Sub-divisibleblocks• Sortandrankyoursearchresultsandaccessadvanced

suburb and property data to pinpoint the very best deals on the market.

You are able to search a number of real estate listings websites. You can narrow down your search with familiar filters like location and property specification. However, you can also filter by investment strategy, as well as suburb statistics and key property statistics, such as rental yield and price in relation to the suburb median, or a combination of any of the above.

The search results are tailored to investors. As well as a brief blurb and picture of each property taken from the source listing site, each search result includes relevant information about other similar properties in the suburb alongside the listing such as rental yield, proportion of owners and renters, sales growth, recent listings by price. Links to local council websites, Wikipedia and Google Maps are also provided with the listing, and you can also save properties of interest to a watch list.

ValueValue is an online tool that provides the most extensive New Zealand property data available. It allows real estate investors to estimate a property’s market value and access full sales history. You can −• Accessthelatestin-depthpropertydatathatsupercedes

incomplete and out-of-date reports • Paytherightpricewhenbuyingandgetthetopdollar

when selling • Checktheestimatedendvaluebeforeimprovingyour

property • Eliminateyourrelianceonthirdpartyadviceasyou

will have access to the data usually limited to valuers and agents

The ‘My Valuer’ tool gives real estate investors the answer to the most crucial question before making an offer on a property – what is it worth? Obviously this is not a registered valuation, it is simply a tool that provides investors with a number of sales that they can then compare to a property they are looking at.

As you can see from the screen shots below, the information provided is similar to what most valuers will be accessing. As valuers will know, the accuracy of this data can at times be questionable. Comparing properties to estimate the value is not a simple process from behind a desk. In addition to this, investors can access an automated valuation model which gives an estimated value range.

Property detail information


New technology

Comparable sales results • Futurecapitalgrowth• Propertyanalysergivesyouallthefinancialfactsyou

will need on a property investment to enable you to negotiate a better deal.

It allows the investor to enter various property financials and calculates cash-flow, equity growth and end-of-year tax rebates. It is comprehensive in terms of both costs and income, includes a depreciation calculator, and allows investors to customise a wide range of fields such as growth rates, occupancy rates, tax rates and mortgage interest rates.

ResearchThe research tool gives access to New Zealand’s property database with the latest and most comprehensive property and suburb data available. You can −• Stayincontrolofyourpropertyresearchanddue

diligence • Pinpointwhichpropertieshavesoldwhereandfor

how much • Tracksuburbanmarkettrendstostayaheadofthe

competition• AccessthefactsaboutanyNewZealandpropertyor

suburb and make successful and rewarding investing decisions.

The general research function in this section is good and gives the investor access to a high level of information for use during due diligence. As mentioned earlier, the accuracy of this data can be questionable. For the investor running a portfolio of properties the ability to track trends is potentially a great tool. This research tool provides some of the information which as a valuer you will be monitoring.

From the average investors perspective it could be information overload, but you can monitor as much or as little as you like. It is historical-based information, and as we know the forecasting of the market is not simple, so you may get calls from the keen investors who still want your advice.

Track performanceTrack performance is a tool which allows real estate investors to know the exact value of their portfolio in an instant using over 70 different tracking factors −• Trackannualtenants,incomeandexpenses• Managemortgageinterestrates• Monitorandminimiseexpenses• Accuratelytrackyourequityandcapitalgrowth

The tracker is designed to help investors monitor their investment. It features tabs dedicated to basic property details, tenant information, cash-flow, equity, overall portfolio details, key contact information, goals and a picture gallery of the portfolio. Overall, there are more than 70 different components which can be tracked.

Map imagery

This is not about replacing the need for registered valuations. It is a tool that investors can use to get information immediately, at any time, which will allow them to assess the estimated value of the property. Perhaps it is a tool for those investors who would normally ring a valuer looking for some free insight and knowledge or for those that traditionally have not known where to begin.

The following is a quote from a review completed for the NZ Property Investor Magazine: ‘Previously only available in Australia, now New Zealand investors can effectively become their own valuers, with unlimited access to property valuations on My Valuer. It also allows you, like valuers do, to compare properties based on their valuations.’

This is not a very accurate assessment of how a valuer works. Perhaps the public and property professionals need education on how a valuer completes a valuation. However, it does seem to satisfy the needs of many investors.

AnalyseThe analyse tool allows investors to accurately analyse an investment property’s future financial return in just a few minutes. You can calculate and receive a detailed report on −• Immediateequityandcash-flow• Incomeandexpenses• Depreciationandtaxbenefits


New technology

LearnLearn is the online on-demand education programme for real estate investors. It −• Givesawealthofcontentonallaspectsofrealestate

investing • Allowsaccesstoover700articlesand1,400videosand

audio fi les • Maximisesyourknowledgeofrealestateinvestingwith

online testing and certifi cation • Givesaccesstowhatyouwillneedtobecomeareal

estate investor.

I have not viewed these resources, but to have this level of information available to educate investors cannot be a bad thing.

How does this affect valuers?The only real negative effect I can see is that perhaps investors may think that the job of a valuer is simple and is just about comparing a few sales. I see much more positive effect from this type of technology. It is good to see the continued education of investors about running their investments as a business and this will hopefully see a resurgence of investors through the next property cycle.

Real Estate Investar is not about replacing the need for a registered valuer. However in some ways it gives investors greater tools that may reduce their

dependence on their local friendly valuer through the early due diligence phase. As long as valuers maintain the relationship they have with investors then the workload should continue as banks still require registered valuations.

As professionals, such as bankers and investors, have greater access to this level of property data, we as valuers will have to continue to lift our game. Much of the information we use as valuers is now available through the public domain.

However, we are still the eyes and ears on the ground that bring independence to the transaction. What we as valuers need to do is ensure we produce reports which will satisfy the purchaser and bank by covering everything that we know about the property. Any omission is a potential question or point of contention. We must also cover off our reasoning and thought processes in arriving at the value.

Where there is perhaps room for change, and maybe the greatest concern with this changing technology, is the need to educate people how a valuer operates. That it is not simply a matter of comparing a few sales and looking at rating values. This is something for the industry to ponder.

To check out Real Estate Investar see: www.realestateinvestar.co.nz/reiaffiliatenz/scripts/click.php?a_aid=Valuit&a_bid=b3d1e167



Tony Sewell

Maori land − a perspective from an empowered property investor

The reasons for the creation of Maori land and the establishment and amendment of legislation to support the concept are well known and now entrenched in the history of land ownership in New Zealand. However it is my view that such subjects require constant discussion and review. This is to determine their relevance today and to ensure that they clearly advantage and do not disadvantage those to whom the legislation applies.

General

Land ownership is one of the fundamental rights available to all New Zealanders. Our ability to purchase, hold, develop, sell, shift or trade property is a main issue in being a New Zealander. Why is it then that one group within our society, owners of Maori land, have that right fundamentally constrained by legislation which gives the fi nal decision on such matters to a court.

Different waysThe only logical reason that I could consider for such an action is that the legislators do not believe that Maori have a desire, or are incapable of, including such transactions without the intervention of the courts. The result of this legislation is that in many instances Maori have to manage their land holdings in a different way from the rest of us.

They do this in a myriad of ways, many of which are highly successful and lead to wealth generation. However, in many cases the result of Maori land legislation is a considerable reduction in wealth generation to the point where signifi cant areas of land are resolved unproductive by legislation. They are therefore incapable of building wealth for the owners and society as a whole.

While I totally respect the concept of having a place to stand, I am not convinced that with the passing of time our places to stand will not change.

General

Consider those in Canterbury whose places to stand no longer exist as they once did, although no doubt new places will emerge.

Wealth lossMultiple ownership of land is very common, be it by joint ownership or some form of incorporation, but it is unfortunately divided into two categories. Maori land title, which while providing for multiple ownership, controls the rights to deal in the land and generally enables the multiple owners to use their property rights without the need of third party control.

These are the consequences from the Maori land model −• Limitedwealthgeneration• Diminutionofpropertyrights• Restrictionsonlandimprovement.

The results are signifi cant wealth loss, and a loss of a sense of ownership and personal responsibility. Many will argue that the Maori land approach protects land ownership. The protection of land ownership is a personal discipline which is learned and does not need to be controlled. After all, many of us are owners of land which has passed down through generations or our ability to buy land is a factor of wealth generated by our predecessors.

SolutionsSo what is the solution? Personal responsibility and a strong sense of ownership or membership of a collective leads to a considerable increase in the search for knowledge and advice about land matters. That knowledge and advice in turn leads to a signifi cant increase in wise, sustainable and wealth generating land use. Personal responsibility will also promote active management of land holdings. This in turn will resolve the number of instances where land is leased on terms and conditions that are well behind those accepted in a less restricted market.

A strong sense of ownership is not restricted to individually owned land. Many families jointly own large amounts of land and ensure it is effectively managed by delegating responsibility for management to a member of the family who holds responsibility for reporting to all family members.

To grow wealth, land needs to be seen as a trading commodity where land is sold and the money is used to purchase better land. That does not mean you move away from land investment – it just means you develop an ethos of constant improvement. Many fear that by selling land they will become landless, but will be active investors in land with a desire to always own land. This can be controlled by not selling land until replacement land is secured.

The debate needs airingIs it not time for the Maori land debate to be given an honest and informed airing? The debate should concentrate on personal property rights and responsibilities, the delegators of ownership, wealth creation and joint ownership models. Based on this debate, Parliament needs to review its paternalistic approach to land ownership by a large sector of our Maori population. The outcomes sought from a review should be improved wealth creation for the whole of New Zealand.

Throughout this article I have used the term wealth creation many times and I defi ne it in its widest sense. It is not just monetary wealth – it is both physical and spiritual wealth as well as monitoring wealth. It is what comes from participation and achievement. I look forward to the discussion.

Tony Sewell is the Chief Executive of Ngai Tahu Property Limited. The views expressed in this article are the personal views of the writer and do not refl ect the views of Ngai Tahu Property Limited.

General


Allan Smee

Professional Pathways and registration in a professional community

Our professional communities, excluding real property valuation, are establishing a robust and consistent process for individual members to achieve registration in one or more professional communities. This registration process is important because it demonstrates to our clients that our registered members have proven knowledge and capability to provide professional property services to clients. It also provides PINZ with a platform to push for member exemptions from legislation.

General

The professional communities which exist under the Property Institute umbrella are −• Propertyandfacilitiesmanagement• Propertyadvisory• Infrastructure,plantandmachinery• Realpropertyvaluation–thiscommunityis

represented by the Valuers Council and has an existing defined registration process through the Valuers Registration Board, which will remain.

The registration process involves −• Aninterviewwithapanelofbranchandprofessional

community representatives• Threeexamplesofprofessionalwork• SupplyingevidencethattheCPDrequirementsare

fulfilled including four-yearly completion of ethics and standards modules

• Twonominationsorlettersofrecommendation• Supplyingacurrentcurriculumvitae.

As already mentioned, the completion of Professional Pathways will be required as a prerequisite for registration in one or more professional communities. The Property Insititute recognises the wealth of experience and

capability that already exists amongst many of our current members. Existing members who have over six years professional experience may therefore apply for registration before 31 March 2012 following the existing process, without completing the Professional Pathways programme.

After March 2012, members will be required to complete the Professional Pathway programme required by the professional community. It important to note that if a member considers that they have enough prior learning or knowledge to pass a particular module they can sit the required assessment for the module without access to any learning material.

If the member reaches the required competency of 75 per cent they will be credited with that module. A member can have a maximum of two attempts at completing the assessment on payment of the required assessment-only fee each time. If a member fails after two attempts they will be required to undertake the full module and pay the appropriate fee.

Allan Smee is the Professional Development Manager for the Property Institute.



Iain Gribble

Professional indemnity insurance

I frequently get asked about professional indemnity cover from members of the Property Institute, some with the knowledge that I am a member of the Executive Committee of the Land Professional Mutual Society and some just because I have known or worked with them.

General

Professional indemnity insurance is required to protect valuers from the fi nancial effects of settling negligence and other claims against them. Generally, cover must be in place when a claim is made. It is evident that if you undertake valuations for banks and most other lending institutions, professional indemnity cover is required. Suddenly, lending institutions appear to require cover for as much as the valuation dollar for dollar. This, of course, is ridiculous. However, I have seen valuers certifying that they have such cover when I am aware that the cover is only a proportion of the value assessed. How can the risk be at 100 per cent?

Getting the coverOther lending institutions require a proportionate amount of cover be provided in terms of the valuation completed. This is more logical, particularly when it is in the range of 10 per cent to 20 per cent of the value. With top-priced houses in Auckland in the range of $5,000,000 to $10,000,000 and some higher, that would require cover of $500,000 to $2,000,000. This is still a wide range. Is it affordable when fee levels are taken into consideration?

Where can this cover be obtained? It can be sourced using insurance brokers, although this appears to be harder than in the past. This is also evident in Australia. It can be obtained from, for example, QBE Insurance (International) Limited, Vero Liability Insurance Limited or a Lloyds syndicate. We have seen others come and go, including one which departed over the past 12 months.

LandProfessional

MutualSociety

Cover and conditionsIf you are not carrying out bank work, do you need cover? The answer would be yes, but how much? Should it cover only legal costs of any claim, or should it cover the full risk or part of the risk of a specifi c assignment? This is a decision for every practitioner to consider very carefully to reduce their exposure to risk.

Do you, as you should, sign conditions of engagement with your clients, limiting the extent of liability? I have seen conditions where the liability of the fi rm for damages or losses in contract, tort or otherwise, including negligence in any way connected with the services provided, would be the lesser of fi ve times the value of the fees, or $100,000. This may be applicable in some contracts and is worth considering.

Role and principal objectives of the Land Professional Mutual SocietyAs a member of the Executive of the Land Professional National Society (LPMS), I can advise that it was incorporated in 1976 as a voluntary risk management organisation representing its members. It is not an insurer. The LPMS has a unique insurance policy and an additional strength is its claims committee system. It is also involved in continuing education.

The principal objectives are to −• Guidemembersonthewaysandmeansofavoidingor

minimising liability claims and risk management• Providememberswithsupportiveclaimsassistanceand

administration, including quality technical, legal and insurance assistance

• Providememberswithaccesstospecificallytailoredgroup professional indemnity and other liability insurance facilities on a voluntary basis.

The LPMS have arranged group professional indemnity insurance for member fi rms continuously since August 1976. Originally membership was restricted to consulting land surveying practices, but membership was expanded in 1983 to include valuers in public practice. In 1985 membership was extended to kindred professions. Professional practices providing consulting services, such

as clerk of works, engineering, farm management, forestry, planning, property and quantity surveying can now be members.

Wider rangeNow the LPMS has arranged group facilities for a range of other companion liability insurances to cover a wider scope of professional and business risks. Some of these additional products include statutory liability insurance, employer liability, director and offi cer liability, public liability insurance cover, run-off cover following cessation of business and internet liability.

Other benefi ts include one-off cover and complementary term life cover. It also controls the events arising out of a claim. There is an internal claims committee which examines all claims and provides support to member fi rms and to the insurer. The LPMS has as its insurance consultant and broker for insurance and claims administration, AON New Zealand Limited in Wellington, the contact person is Doug Morton.

The executive committee is made up of four surveyor representatives, one quantity surveyor and four valuers − Earl Gordon of Wellington, Alan Stewart of Christchurch, Alex Haden of Tauranga and myself. There is a permanent secretary.

If you become a member of the LPMS you are given full support and details on process and procedures, as well as a detailed member’s manual. Annual fees are based on claims history, annual valuation fees, level of cover and level of deductible agreed.

ConclusionCover can be very expensive, although it is needed for members in many instances. When reviewing the appropriateness of your cover, carefully check not only the premium payable but also the insurance contract and the support provided. Unfortunately there have been large claims in the past relating to professionals, including valuers, and insurance companies refl ect the risk and claims history in the premiums they charge.

Iain Gribble is a Fellow of the Institute of Valuers.

General



Robert Todd and Regan Johns

Southland residential and lifestyle

The Southland residential and lifestyle property market went through a strong period of growth from about 2001 through to late 2007. At the peak of the market sales volumes for residential dwellings within Invercargill city in 2007 were up to 230 sales a month. In 2011 sales volumes have been down to approximately 80 to 90 sales a month, continuing on from 2010.

Southland feature

Demand for vacant residential sections during the peak of the market was strong with a signifi cant number of new dwellings constructed. With two substantial subdivisions within the Waikiwi suburb of Invercargill city, and a third planned, supply and demand levels were relatively even. A large residential and lifestyle subdivision was created on the south-eastern fringe of the city providing semi-rural sections was completed at the start of the global credit crisis and recession. The majority of these sections are still available.

What has happened in 2011 The residential and lifestyle market within the Southland region has remained relatively static in 2011, as it was in the previous two years. This in turn was preceded by a decline in activity during 2008. It is apparent that purchasers in the residential and lifestyle market have remained cautious during the year, particularly in the price bracket of $500,000 and above. Activity within the $200,000 to $300,000 bracket has been relatively steady, but there has been an increased number of transactions in the $150,000 to $250,000 bracket, possibly attributable to 100 per cent lending attracting fi rst home buyers into the market. This is especially evident within Invercargill city.

Sales activity and demand for purpose built residential rental properties and demand from investors for stand-alone residential dwellings has been

Southland feature

limited from 2009 through to late 2011. Tighter funding requirements from the main lending institutions, along with the closure of many second tier lenders and changes in depreciation and loss attributing rules, have had a significant effect.

Residential rental rates have remained relatively steady over recent years. This is due to a relatively robust local economy, along with the zero fee scheme at the Southern Institute of Technology which has increased student numbers significantly over the last decade.

Sales activity within coastal areas of Southland including Stewart Island, along with the lake townships of Te Anau and Manapouri, has been minimal with a limited number of transactions. Sales activity in Riverton has remained relatively steady in comparison. Historically demand for holiday homes and sections has been strong throughout these areas, although we have noticed an increase in sales activity over recent months which is positive.

Te Anau has a significant over-supply of vacant sections with numerous residential subdivisions carried out during the past decade. We believe at current levels of demand there is in excess of 20 years supply available, which would indicate the potential for capital gain on vacant sites is limited.

Rural and lifestyle salesThe recession, global credit crisis and the downturn in the rural sector had a negative effect on the Southland property market. However a record payout by Fonterra for

milk solids for the 2011 season, along with higher returns for sheep and beef farmers and relatively low mortgage interest rates, are positive factors. Due to an increase in farm transactions, sales volumes of lifestyle properties on the outskirts of Invercargill city and the Winton township in central Southland have increased, particularly in the $500,000 to $1,250,000 range.

Two-tier market During 2007 and 2008 a significant number of vacant sites within the south Invercargill suburbs were purchased and developed by a North Island company offering new four bedroom homes with ensuite bathrooms and internal access double garage. The majority of these properties were purchased between 2007 and 2011 by out-of-town investors, with some having rental guarantees in place. Out-of-town investors were buying the properties at levels around $290,000 to $320,000.

Unfortunately these purchasers will have suffered an actual or paper loss due to the fact the properties are now selling for approximately $230,000 to $260,000, depending on whether they are new or have been occupied. Although perceived by out-of-town investors to be an attractive investment at the time, the developer encouraged the use of valuers from outside the province to support the sale and purchase contracts. Potential for capital gain and possible tax benefits were marketing points used by the developers. This situation has not reflected well on our profession with a number of disgruntled purchasers.


Rating valuation The Invercargill City Council has just had its triennial revaluation carried out by Quotable Value for rating purposes with the effective date being 1 July 2011. Some of the higher socio-economic suburbs have had minimal increases up to approximately 2.2 per cent in their rating valuations. However the lower socio-economic suburbs have had substantial decreases between four per cent and 17 per cent from 2008 rating valuations.

The majority of commercial and industrial rating valuations have declined, with percentages varying between three per cent and 33 per cent, depending on the age and condition. Unreinforced masonry buildings built before 1935 have had the largest adjustment. As is typical with mass appraisal valuations, variations between the rating valuation and actual sale price are considerable and have varied by up to 25 per cent.

We have analysed the latest 10 sales from each of the suburbs in the table above. These include the median sale price, median rating valuation, the percentage changes between the rating valuations, and the percentage difference between the rating valuation and the recorded sale price.

Sample tender results

SuburbAverage Change

Sale price Rating val 2001 Rating val 2008 RV to RV RV vsAppleby $109,825 $109,100 $126,700 -16.93% 11.10%Georgetown $113,450 $127,500 $136,500 -8.42% 16.90%Glengarry $162,760 $160,100 $170,400 -6.35% 8.70Richmond $187,000 $165,889 $171,889 -3.97% 27.44%Gladstone/Waverley $308,550 $334,000 $330,500 0.68 11.29%Grasmere/Waikiw $234,600 $218,429 $239,286 -11.49% 9.65Otatara $412,143 $422,143 $443,571 -4.98% 7.29Myross Bush/Seaward Bush $407,000 $411,000 $442,143 -7.21% 14.72%

Market outlook With Southland being a rural based economy, there are positive indicators within the economy such as the record payout by Fonterra for milk solids along with higher returns for sheep and beef farmers. Relatively low mortgage interest rates as mentioned earlier are also a positive factor. Potential onshore energy resources, especially lignite deposits within the Mataura basin owned by Solid Energy, may have a positive effect in the near future.

Housing affordability throughout Southland, including Invercargill city, is relatively strong. The median house price in Invercargill is in the vicinity of $200,000, with three bedroom houses constructed in the 1970s on 700 square metre sites with garaging available for $125,000 to $175,000 within the south Invercargill suburbs. Quality four bedroom homes within upper socio-economic areas of Invercargill area are available for $400,000 to $600,000.

The table below shows the latest residential sales data for the Invercargill residential market for the months August 2009 to October 2011.

Sample tender resultsInvercargill

Month SalesMedian Sale

PriceDays to Sell

Aug-09 98 $210,000 33Sep-09 105 $195,000 31Oct-09 113 $186,000 31Aug-10 71 $210,000 43Sep-10 106 $189,000 30Oct-10 68 $169,500 43Aug-11 92 $207,000 34Sep-11 94 $175,125 35Oct-11 93 $207,000 27

The data shows a flat market at present. However we anticipate that with continued consumer optimism, low regional unemployment and steady mortgage interest rates, the local Invercargill market will improve gradually over the next 12 months.

Robert Todd and Regan Johns, Thayer Todd Valuations Ltd, Invercargill

Southland feature



Commercial, industrial and rural markets in Southland

The Southland valuers have just completed their biennial pedestrian counts in the CBD of Invercargill where pedestrian numbers have fallen steadily since 1994. The Resource Management Act has allowed large bulk retailers to develop their premises on the fringe of the city and this has seen national brand stores relocating to join them. This has had a serious effect on the fringe retail areas supporting prime retail shopping precinct.

Southland feature

Trevor Thayer

Despite the recession, Esk Street has enjoyed strong rental growth from around 2008 through to the present day. Only a couple of poorly maintained stores with narrow frontages which are unappealing to nationwide franchises are not benefitting from that rental growth. The boutique fashion area on Kelvin Street between Don and Tay Streets has also retained high occupancy levels. Some modest rental growth has also occurred where landlords have maintained their properties to a good standard.

Vacant propertyThe latest July 2011 vacant space survey showed the majority of vacant spaces were on Tay and Dee Streets, main arterial routes. The relocation of Postie Plus, Storage Box and Hamills Outdoor Shop to Leven Street have all had a significant effect on the occupancy levels of Tay Street. Postie Plus was in the premises formerly occupied by Farmers Trading which was the anchor tenant to Cambridge Place Arcade, a small 20 shop arcade.

These small businesses do not have the marketing budget to pull in customers and they rely on the anchor tenants to generate foot traffic and customers. The anchor tenant position will be occupied by a direct importer next month, one which is complementary to the $2 Shops that have set up business on both south and north sides of Tay Street. The result is lower rentals, lower values and a diminished rating base.

The largest remaining store owned by H&J Smith Ltd is apparently relocating into their department store in mid-2012 and the former WINZ office has relocated. These two large buildings will take some time to attract new occupiers. Because of the vacancy levels, we see rentals remaining competitive.

Many of our city buildings are over 100 years of age. Few if any have had any structural strengthening work undertaken. The buildings which have been poorly maintained or show a lack of maintenance and signs of deterioration will see the building code requirement change. The local territorial authority and central government will have to put in place policies which require building strengthening as has been the case in Nelson and Wellington.

Effect of Christchurch earthquakes An Esk Street property before the earthquakes had an offer of around $800,000 declined by the vendors. The property is leased for a six-year term and has recently sold at 30 per cent less, with a yield in excess of 10 per cent.

Buyers are very cautious and a request for engineering reports on all buildings, even if they are built after 1970, is common. The volume of commercial transactions has been relatively low because of the lack of quality stock available in the market. For larger transactions, well-tenanted properties have tended to see yields increasing.

The market is correctly assessing higher risk results with higher capitalisation rates. A building with a lease of less than two years to run, where the tenant has no intention of renewing, has recently sold at a yield in excess of 16 per cent.

New developments In April 2011, the new WHK office building of 3,200 square metres was opened. This is a two-level building on a commanding corner site with sub-tenants including a café and professional offices. The development acquired adjoining land to provide customer and staff car parking. This property is developed on the eastern fringe of the city on the corner of Spey and Deveron Streets.

One block to the south, another established accounting practice, Malloch McClean, has acquired land and their new building will be built over the next 12 months. This will be a stand-alone owner-occupied property on a site of approximately 1,900 square metres site. These decisions give you the underlying confidence these businesses have in the south.

Industrial area In the traditional Bond and Mersey Streets locations we are seeing an increasing number of tenancies for lease. In the current economic conditions rent holidays or

inducements will be needed to move some of this stock.Industrial building yields have held up better than

commercial properties. We have buildings selling with a yield as low as 6.5 per cent. A modern quality building recently sold at a yield of 7.9 per cent but yield for older stock is generally between nine and 10 per cent. Over the 2011 year there has not been a low volume of sales as there is a lack of stock coming on to the market.

Rural market Rural transactions were at very low levels during the 2010 year. The turning point in rural property was when new market interest was generated from European buyers and the New Zealand super fund coming into the industry. This money circulation has created an increase in volumes during the 2011 year.

Premium prices are being paid for quality small dairy units. In some cases these prices are creeping back to the peak of the 2007 market, with going concerns up to $45,000 a hectare including Fonterra shares. Larger units have generally been $32,500 to $37,500 a hectare, excluding Fonterra shares. In recent months, there has been strong demand for small dairy run-off properties where bare land prices have exceeded $30,000 a hectare.

Other grazing properties have also seen improved activity. Many of these have seen price stability because of the potential for dairy grazing in the majority of the areas. We see the renewed confidence in the rural sector as allowing those who have been under financial stress or are aging to leave the industry with options available to them.The strength in the dairy industry has resulted in grazing block rentals increasing significantly.

Southland accommodates the largest milk drying facility in Australasia at the Edendale plant. During the 2011 year, Fonterra said they would need to look for an additional site in Southland to accommodate the planned milk growth. The plant will need approximately 200,000 cows to be viable. In recent weeks, Environment Southland stated that dairy land use will have tighter controls imposed on the rural sector to protect waterways.

The outlook for beef, sheep and dairy remains strong due to the demand being created in the countries we trade with. We understand the demand for lamb is simply due to the reduced numbers worldwide. However, like all commodities they do not stay at record prices for ever. Further volatility should be expected.

SummaryQuality properties have sold particularly well. During the last three years, there has been evidence of rental growth in quality buildings, whereas we expect the older stock will come under pressure as new storage space has been developed for some anchor tenants. When they vacate

Southland feature

Continued on page 38 >>



Southland visit

Coming from Wellington, I think it is always unfair when a stereotype of a place is confirmed, and so it was last Friday when Jo Parry, the QAAS Project Manager, and I flew into Invercargill. It was extremely windy, grey and cold and to be fair it was not the only place in the country which was experiencing gale force winds. The landing was particularly lumpy as in the pilot’s words, and I am not too proud to say that even a hardened flyer into Wellington like myself found it a little too exciting. The pilot received my compliments on his skill.

Southland feature

Nicola Bilbrough

Invercargill is typified by wide roads, stately, low-rise commercial buildings, with weatherboard and brick villas. My memories of Invercargill are of a very wet, windy and cold place. In my last year of high school I spent a week there playing in the South Island Secondary School Netball Championships. We played two games a day for a week. It rained every day. That rain makes very good grass grow which, in turn, grows fat lambs and lots of cows. Invercargill is a rural service town to some of the richest farming country in New Zealand.

The city centre is dominated by H & J Smiths, the Ballantynes or Kirkcaldie and Stains of Southland. Like its counterparts, it has great tradition of endurance and quality, a reflection of the district. This weekend was to be the Burt Munro motorbike race at Oreti Beach, but unfortunately the weather made it too dangerous and the beach race was called off. Burt Munro is not only world famous in Southland or New Zealand, but he is actually world famous.

We were in Invercargill to present the QAAS to the local Property Institute branch. The group that attended were made up of sole practitioners, QV and Darroch employees, and representatives from a medium-sized company. It was a good reflection of our profession.

The discussion after the formal presentation was frank. I find that the best feedback comes from these discussions as members digest the system and relate it to their business. They are interested in the workings and the practicalities of the system as they should be. The QAAS has been designed to improve business practice and it is aimed at raising national standards of practice. A company applies for accreditation by submitting their quality management system to the

<< Commercial, industrial and rural markets in Southland – continued from page 36

Southland feature

Institute and engaging in a contract with it to participate in all QAAS activity. A template on how to write a quality management system and what is required in it will soon be available.

Concerns processWithin the QAAS is a ‘concerns’ process, whereby an end user of an accredited company or the Property Institute can raise a concern about that company where a breach of the contract or failure to comply with the processes in the quality management system is suspected. Of particular interest to the Southland Branch is the requirement for accredited companies to state their scope of work and location of practice.

In the not-so-distant past, non-Invercargill resident valuers have been employed to value property in Invercargill. Of note is an out of town developer employing an out of town valuer to value the proposed houses off plans. The local valuers were considered too conservative by the developer to make the project work. The valuer employed was not only not local, not even from the South Island. This is concerning on many levels. The valuer is working a long way from their usual base, the developer unprepared to use local advice, and the financial institution accepting such a valuation.

I am not adverse to such practice where it is specialised property such as hotels or aged care facilities. This is understandable as the market for specialised properties can arguably be nationwide. Often clients with large property portfolios commission larger, national firms to undertake valuations round the country of their portfolio.

However residential properties, in my opinion, are not specialised in this sense and the valuation of them does require intimate knowledge and understanding of the local market, neighbourhood and economy. I believe this valuer was not undertaking best practice. The valuation profession has a large number of sole practitioners and small to medium-sized practices. These entities have every right to exist and, if competent, to their fair share of work.

Becoming an accredited company will show the public, financiers and other end users of valuations that you have the systems and processes in place to support high standards of professional practice. It will also show that as an accredited member you are regularly reviewed to ensure that you continue to operate at best practice

standards. As an accredited member you participate in self-evaluation, which is a national improvement and learning exercise. Accredited sole practitioners will be encouraged to participate in focus groups so as to develop a strong support network.

Accreditation offers validation that you are lower risk to the professions end users. It is also a good insurance to our end users and this is already being recognised by one professional indemnity insurance company associated with the Institute. As part of the accreditation system we are also going to ask that accredited companies inform the Institute if they have had the ‘hard word’ put on them to alter their valuation to make a deal work.

We are very mindful that the banks have some culpability here. They have pointed their finger at our profession and in doing so need to look hard at their own practices. We have already talked to representatives from the banks about this initiative and they are very keen for it to be part of the QAAS.

Risk mitigationBut back to the Southland situation. Will the QAAS provide relief for our members in Southland from carpet baggers? For those companies that undertake nationwide work, they will need within their quality management system, satisfactory risk mitigating processes relating to that work.

If an accredited member changes their originally stated scope of work, or geographic location of work, they will need to show the alterations in their quality management system to cover that change. In addition accredited Southland members, as other accredited members nationwide, should be recognised by financial institutions for investing their time into producing a quality management system and the security which that offers them as an end user.

We did not fly out of Invercargill, but drove to another presentation in Queenstown. It was a very pleasant drive through beautiful rolling countryside of lush green pasture or tilled dark dirt. I want to go back to Southland once the QAAS has been up and running for a while and when it is not a howling southerly gale. I am sure both will happen.

Nicki Bilbrough is a Board Member of the Property Institute of NZ, Chair of the Valuers Council and President of the NZ Institute of Valuers.

existing buildings, rental rates will again come under pressure.

Our fundamental industries aluminium smelting and primary production remain the backbone of Southland. The outlook for these industries looks strong. It will depend on the rural sector’s spending habits and on how many retailers can grow their business over the short term.

The opportunities in our industrial and commercial sectors rely on export earnings. Southland generates nearly 20 per cent of New Zealand’s gross domestic product from a population of about 100,000 people, which is only two per cent of the country’s population.

Trevor Thayer, Thayer Todd Valuations, Invercargill



Profile of Evan Harris retail consultant and property manager

Profile

Evan is the national Retail Property Management and Consultancy Director for Colliers International based in Christchurch. His work involves retail consultancy and retail property management throughout New Zealand. Evan oversees the management of the 26 shopping centres currently managed by Colliers throughout New Zealand. He also provides consultancy advice on the establishment of shopping centres, retail mix, rentals, sales projections, demographic profiles and other matters relating to potential shopping centres or shopping centre upgrades around New Zealand.

Evan qualified as a valuer at Auckland University in 1974 and originally worked in the Housing Corporation as a valuer in Auckland and Christchurch before moving to HG Livingstone Ltd as a valuer and property manager in 1979. With the merger of this company by Colliers International he is still there.

Eventually, after doing both valuation and property management work, he left the valuation role particularly as the retail portfolio grew, and since the mid-1980s he has mainly been a property manager. In 1987 he was one of the four senior members of Livingstones who purchased the company from the previous owner and he still has a shareholding in the venture after the acquisition by Colliers.

Major developmentsEvan is closely involved with several major developments at the moment including the expansion of The Hub Hornby in Christchurch, Coastlands Wellington and Westgate in West Auckland. Westgate will potentially be New Zealand’s biggest shopping centre with 200,000 square metres of retail space in five separate precincts. The existing Westgate shopping centre will have 40,000 square metres enclosed shopping centre added, anchored by a two level 10,000 square metres Farmers department store and a Countdown supermarket.

There will also be an entertainment and adventure precinct around a new town square. This will include a major three level library and a food and beverage precinct. There is also a large format stage to be completed in 2013 and a

component which will include a major hardware store and other yard based retail outlets.

Evan undertook extensive demographic retail work on this site. As with the extension of the north-western motorway, and the connection through to the shore, it now services a catchment in excess of 100,000 people, and it is this type of work that Evan undertakes as part of the consultancy process in developing these sites.

Riccarton Mall project and Christchurch re-buildWhen Evan joined Livingstones and did both valuation and property management the company had just begun a major expansion of Riccarton Mall in Christchurch. He became involved and enjoyed the challenge and seeing the results. He says, that there is nothing better than seeing an idea come through to fruition with the development of a new shopping centre and to look at the retailers doing well and the public enjoying their new community facility.

A good example is The Palms shopping centre in Christchurch, where in the early 1990s Evan and the original owners saw the opportunity for the new development on the site of what was a stand-alone supermarket and discount department store.

Initially Evan’s clients purchased the original buildings, being the supermarket and discount department store. They then proceeded to buy additional land and 24 houses in a street, which eventuated in the opening of stage one of The Palms in 1996. At this point it was around18,000 square metres. It was such a successful development that it needed to be expanded four years later and is now one of Christchurch’s major shopping destinations.

The second stage included the introduction of a large Farmers department store, an eight screen Readings Multiplex, an indoor and outdoor entertainment food and beverage precinct and a further 30 stores, now making the development 34,000 square metres. Evan feels that one of the good points in this type of career is seeing retail projects become successful and good shopping centres in operation.

Re-startFollowing the disastrous earthquakes at Christchurch, he has been involved in Re:Start. This is a central Christchurch initiative to get part of the central city open again. Seeing this container based retail open in late October, along with Ballantynes, and being part of the huge success and the looks on the faces of the people of Christchurch as they were able to venture back into their central city gave him a real buzz.

The Re:Start development was a concept initiated by Ballantynes and several major city land owners. The temporary container city will be in place until owners

want to redevelop their sites as it occupies sites on which buildings have been totally demolished.

Evan feels that one of the drawbacks in this type of work is when you have a successful shopping centre but you see a retailer struggling. After working with them and analysing their business you realise that it is just not right for them, and they are unable to capture the vision or have what the consumer wants. The retailer subsequently fails and you have to deal with the consequences.

New Zealand is a country of small retailers, and it is good to see the ones that flourish and succeed and grow into major chains, but it is also good to see the small individual retailers do well. Unfortunately many small businesses fail and this is a drawback.

Advice for possible new entrants Evan believes that if you want to be in retail property management you have to have a real interest in how retail works, how retailers do their business, and how the retail property market is there to provide a service to the customers through the retailers. You therefore need to have a desire to know more than just the property factors, but also the retailing factors and what makes it work.

Retail property is a dynamic investment that needs hands-on involvement. Commercial property can be a good passive investment for those wanting this style, but that is not what retail property offers. The returns can be higher, but the involvement and expertise is greater and the investment needs to be worked on to ensure that the right operators are offering the right products to the consumers. Successful retailers will pay you the rent and give you a good return on your investment, but you must work with them.

Implications of the Resource Management ActEvan feels that the difficulty of developing projects with the compliance and objection process through the Resource Management Act is a very expensive, long-winded and often thankless task. He says retail projects will only survive if they are designed to suit the customers’ needs and provide the retailers with a base to work from. The market should determine how that works rather than the competitor objection process that good developers are now put through in resource management hearings.

He also feels that the Act theoretically excludes competitor objections, however through a variety of subtle means, retail project developers are still finding the process is being elongated and is particularly costly. In addition local authorities are now imposing more and more rules and policies that at times come from a protectionist viewpoint and do not consider consumer needs and demands.

Profile

Up-to-date, national property information for everyone in your off ce

The Property Guru search tool allows searching on address, title, valuation reference, owner or legal description. Once you have entered 5 characters in the search bar the powerful predictive search starts offering intuitive suggestions and options.

Create lists: Search by a street, a suburb or a town to create lists of properties and easily find details such as ownership, size and when it was last listed for sale or rent.

Filter: Use various filter criteria to narrow down your search and create “watch lists” which can be saved and which update automatically.

Market information:• Understand the demographics – information directly from Statistics NZ web site• Know who owns a property, and what property an individual owns, in any part of the country • Click through to find the appropriate phone number (where available)

Marketing: • Know what is, or has been, in the rental market in an area • See how the property was marketed in the past• Complete an easy “one click” mail merge on a list• Assess an owner’s assets and potential as a client: direct mail to the right prospects• Improve your presentations and proposals with maps, aerial imagery and property reports • Investigate potential properties to manage: what has been on the market for sale, but not sold

More information:• Details regarding a properties rateable value, sales history and estimated market are available with a single click through to the Terranet website (note: these are paid reports)

Contact: Auckland and Northland Glenn 021 915 603Waikato/Bay of Plenty/Taranaki Paul 021 355 857Wellington/Manawatu/Hawkes Bay Michelle 029 915 6005South Island Rod 029 915 6017

CR

AN

K38

542

Get a FREE demonstration now! Call Freephone 0508 483 772 or email [email protected] to arrange a free demonstration with your local sales representative.

Knowledge is power!Property Guru allows a user to access multiple sources of information about properties and owners in one easy-to-use web application.


Up-to-date, national property information for everyone in your off ce

The Property Guru search tool allows searching on address, title, valuation reference, owner or legal description. Once you have entered 5 characters in the search bar the powerful predictive search starts offering intuitive suggestions and options.

Create lists: Search by a street, a suburb or a town to create lists of properties and easily find details such as ownership, size and when it was last listed for sale or rent.

Filter: Use various filter criteria to narrow down your search and create “watch lists” which can be saved and which update automatically.

Market information:• Understand the demographics – information directly from Statistics NZ web site• Know who owns a property, and what property an individual owns, in any part of the country • Click through to find the appropriate phone number (where available)

Marketing: • Know what is, or has been, in the rental market in an area • See how the property was marketed in the past• Complete an easy “one click” mail merge on a list• Assess an owner’s assets and potential as a client: direct mail to the right prospects• Improve your presentations and proposals with maps, aerial imagery and property reports • Investigate potential properties to manage: what has been on the market for sale, but not sold

More information:• Details regarding a properties rateable value, sales history and estimated market are available with a single click through to the Terranet website (note: these are paid reports)

Contact: Auckland and Northland Glenn 021 915 603Waikato/Bay of Plenty/Taranaki Paul 021 355 857Wellington/Manawatu/Hawkes Bay Michelle 029 915 6005South Island Rod 029 915 6017

CR

AN

K38

542

Get a FREE demonstration now! Call Freephone 0508 483 772 or email [email protected] to arrange a free demonstration with your local sales representative.

Knowledge is power!Property Guru allows a user to access multiple sources of information about properties and owners in one easy-to-use web application.

Date post:	10-Mar-2016
Category:	Documents
Upload:	property-institute
View:	217 times
Download:	0 times

Property Quarterly (December 2011)

Documents