City suites are on the rise
4:00AM Sunday May 24, 2009
By Jane Phare
Older investors are helping fuel a resurgence in the inner-city Auckland apartment market.

The sector is bouncing back after two years suffering from leaky building fears, over-supply and banks refusing to lend the same percentages on “shoebox” apartments as other properties.

Last year’s Auckland City Council valuations showed inner-city values had dropped by 3 per cent, compared with an average increase of 12 per cent.

But property experts said activity in the market had risen by as much as 50 per cent in recent months.

They attribute the improvement to lower interest rates, first-time buyers choosing apartments instead of expensive houses and the lure of better returns than the 3 or 4 per cent offered by banks.

That’s brought new investors into the market, including older people. Bayleys is targeting “mature professionals” and family investors looking for a competitive return as it markets suites on the top floor of the five-star Westin Hotel at Lighter Quay in the Viaduct.
They range in size from 32sq m to 75sq m with a fixed return of 6 to 8 per cent. Among the 24 rooms is a suite where David Beckham and Sir Elton John stayed during their last visits to New Zealand.

The surge in interest has made life harder for bargain hunters such as long-time property investor Terry Rota, who specialises in buying city apartments to add to his portfolio or resell on Trade Me.

Rota said investors were “rampant” at the lower end of the market. Six months ago he could buy a 40-50sq m apartment – the smallest most banks will lend on – for $140,000. Now that sum would only buy a 32sq m property.

Signs the bargains were drying up emerged late last year. In November Rota offered $100,000 for a one-bedroom inner-city apartment with a $140,000 reserve, but the property was turned in.

After interest rates dropped in December, the same apartment was re-auctioned and sold for $167,000.

Martin Dunn, of City Sales, spotted an opening when he realised older investors were starting to buy apartments.

Realising they feared their property would be trashed by tenants, and not wanting to be lumbered with the day-to-day management, his company last week launched a new venture.

It is offering 23,000 apartment owners $10,000 free insurance coverage for malicious damage if City Sales managed the apartment as part of an “aggressive” expansion of its rental and property management department.

Graham Smith, manager of Barfoot & Thompson’s city residential office, said activity in the apartment market had increased 50 per cent in recent months.

Small apartments were achieving prices “acceptable to the vendors” rather than being passed in.

Rachel Dovey, Bayley’s residential manager for the city apartment market, said lower interest rates meant properties in the “sub-$300,000″ bracket were being “snaffled up” by investors because of the good return.

But property investor Andrew King warned new investors to be “wary”.

“It is a business and it is risky.” King, vice-president of the New Zealand Property Investors’ Federation, criticised get-rich-quick property seminars that pushed people into buying property without educating them properly.

He said there were plenty of good books on property investment and free advice available from property investment associations.

Fisher & Paykel Appliances’ shares have been placed in a trading halt until Wednesday as the whiteware maker continues working on a rescue plan with its banks. This is a big one for us here in NZ and may come as a surprise to many who don’t really believe we are in a recession or even understand what that means.

The New Zealand dollar reached a seven-month high against the greenback, as the United States currency capitulated after heavy offshore selling. This is not so much about us doing well but the Americans struggling with getting their economy back on the straight and narrow.

Not learning from the global credit crisis Options dealers in Tokyo said hedge funds have been buying dollar call options as far out as seven years in recent weeks with strike levels above 120 or 130 yen. SEVEN YEARS.

So the wheel continues to turn very slowly, the  mistakes pre credit crunch seem to have been forgotten and people every where are still wondering how they are going to fund themselves in retirement.

The Lifestyle Builder (c) is my way of helping people reach retirement without having to change their lifestyle dramatically now and without having to compromise on their standard of living in retirement. You can get a free consultation with a Wealth Coach at Professional Investment Services (powered by Financial Gain) to see if the Lifestyle Builder (c) will work for you.

Visit us at Professional Investment Services (powered by Financial Gain) to find out more.

News today that the Bank of New Zealand is hoping to raise at least $150 million from New Zealand retail and wholesale investors, for general corporate purposes. It will be interesting to see what rate they go after and how quickly they fill the offering after the success of other raisings this year.

The ING Property Trust slid to an annual after-tax loss of $63.1 million, reversing the previous year’s $72 million profit, as the slowing economy hit property values. This illustrates just how deep the property crash has gone but it also makes me wonder why this loss is only just coming through to the news now, we are after all at least 18 months past the peak.

The New Zealand dollar peaked at its highest level against the greenback in nearly a week as the United States currency weakened on growing optimism the global recession is moderating. Amazingly our memories of 2008 are being eroded and the good news spin merchants are gradually making the financial world look like a wonderful place. I guess that depends on whether your just getting into the market or if you were in before the crash.

Professional Investment Services (powered by Financial Gain) is based in Emily place in Auckland CBD, you can contact us for a free consultation by visiting our main website NZPIS

Part of my daily routine with Professional Investment Services is to read the variety of news that is being produced in the various markets, lending, shares, property, managed funds , kiwi saver etc etc.

To give you an idea the snippet o news below is from the New Zealand Stock Exchange and is a great resource.

Enjoy.

May 19 – OPEN: The New Zealand dollar gained nearly a cent against the greenback overnight, on a healthy ongoing appetite for risk.

The New Zealand dollar rose to US59.53c at 8am, from US58.60c at 5pm yesterday.

BNZ Capital currency analyst Danica Hampton said Indian election results, Japanese consumer confidence and British housing statistics spurred gains for the NZ dollar on the coat-tails of firmer Australian and US currencies.

ANZ said just as the kiwi looked vulnerable, it was able to move higher on the back of Asian, European and US equities, and risk appetites were back with a vengeance.

In other currencies, the NZ dollar hit a fortnight low early today against the Australian dollar, and by 8am was trading at A77.63c, from A78.30c at 5pm.

The NZ dollar rose slightly to 0.4391 from 0.4360 against the euro, while trading at 57.36 yen, up from 55.55.

Against the pound, the dollar gained slightly to 38.79p, from 38.66p. The trade weighted index rose to 57.60 at 8am from 57.05 at 5pm.

In overseas markets, the US dollar rose against the yen after comments by a top official in Japan spurred speculation of intervention by authorities to curb further strength in the Japanese currency.

A rally in US stocks encouraged investors to take on riskier investments, reducing the safe-haven demand for the Japanese currency.

I have been saying this for many years now and it is the main reason why  the companies Financial Gain Australia and then Financial Gain NZ were started.

Eventually and I believe this is just a matter of time, the eligibility criteria to receive government assistance in retirement will exclude just about everybody.

This article in stuff is the sort of thing that highlights the discussion is already on the table and it won’t be long before we can not receive government support in retirement until we are 70.

Article begins here.

International consultancy Mercer has joined in the call for retirement age reform in New Zealand after Australia unveiled plans to boost the eligibility age for the national super from 65 to 67.

Mercer, which is one of six approved KiwiSaver scheme providers, says New Zealand needs to match Australia’s tightening of superannuation eligibility and also build a better retirement policy framework.

Mercer’s suggestions come after the Investment Savings and Insurance Association called last week for New Zealand to start discussing the possibility of raising the minimum eligibility age for NZ Super from 65 to 67.

The ISI estimates the ageing population will push up superannuation costs from the current 4 per cent of gross domestic product to 9 per cent by 2020.

Mercer retirement, risk and finance chief Paul Newfield said super should certainly be on the Government’s policy agenda.

As New Zealand’s population increased from 4.3 million now to a little over five million by 2051, so too would the percentage of the population over 65 grow from 11 per cent to 25 per cent, putting pressure on government funds, he said.

Source: www.stuff.co.nz

Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that US equities may plunge to half their lows hit in March as a deflationary depression bites.

Now that is a mighty big call. What can one say about that other than get ready to buy buy buy the amazing bargains that will be around.

Hang on though. If the market crashes to half it’s low in March that means that many companies, and some of those will be large ones will actually no longer be around.

So what do you do? try and pick the stocks that will survive? How will you do that? As we have seen even some of the biggest companies in the world have collapsed in this credit crisis.

In my opinion if the above does happen I will be looking extremely hard at a portfolio that is made up of indexes. After all a major company can collapse but the underlying market is still there.

It’s not a sexy strategy but I bet you will appreciate the slow and steady approach in 5 or 10 years time when the market is in it’s next boom.

At Professional Investment Services (powered by Financial Gain) we prefer to take the long term approach and develop strategies that are not only appropriate to you but have been proven time and time again.

Finance Minister Bill English has told banks to lower their profits, after the four big Australian-owned lenders reported total profits in excess of $4.5 billion.

It always amazes me when the Banks make statements about how tough it is yet unlike many other businesses that are actually loseing money they are merely not making as much as before.

Now that would be ok in normal circumstances to not be happy about making as much money as before however we are in a recession, we are in a recession that was bought on by the practices that many of these banks adopted and yet they are not happy because they are not making as much money as they did in the good ole days, give me a break.

At Professional Investment Services powered by Financial Gain

The Reserve Bank says that banks must continue to lend to “creditworthy” borrowers.

In releasing its six-monthly Financial Stability Report today, the central bank warned that credit growth had slowed in recent months.

“Lending criteria have tightened and some businesses are reporting difficulties in obtaining credit,” RBNZ Deputy Governor Grant Spencer said.

At Professional Investment Services we have noticed an alarming number of service issues as well. In Australia for example it is taking months to get loans settled whilst here in NZ the philosophy of the lenders has certainly changed, it’s no longer let’s see how we can make this deal work it’s now lets see how to decline it.

The knee jerked a long way and now it’s time to bring it back.

The New Zealand dollar retreated overnight after hitting a new six-month high against the greenback around US61.25c during the evening.

However the share markets  benchmark index climbed to a 6-1/2-month high during morning trading before going into a rapid decline after the opening of the Australian market.

My “favorite” share (it’s a long story and yes those are inverted comma’s)  was making some ground but news that Telecom, gearing up to launch its new $574 million mobile phone network, will face a new competitor from August seemed to put a dampner on the run.

China fell deeper into deflation in April, but economists said the central bank was unlikely to shift policy as a result and expressed confidence that prices would be rising again before the end of the year.

This does not bode well for the world economy however there have been other signals of recovery over the last month or so.

At the end of the day though you need to take responsibility for your retirement. I believe that it is going to be impossible for the government to fund a pension scheme by the time I reach 65, what do you believe?

Creating wealth for your retirement is actually quite easy as long as you take action and follow sme simple rules.

At Professional Investment Services (powered by Financial Gain) we are able to help you develop a strategy that will allow you to create wealth for your retirement at your own pace. We help you plan and then monitor your stratgey making tweeks along the way to ensure you are always in control.

Give us a buzz on 09 3033305 and spend an hour with one of our wealth coaches, this is absolutely free and will gve you an idea of how we can help you. You have nothing to loose and everything to gain.

Unemployment has hit a six-year high, according to official figures out today.

Statistics New Zealand’s household labour force survey for the March quarter shows that the number of jobless rose by 7000 to 115,000 during the period, with the unemployment rate increasing to 5 percent from 4.7 percent.

However, the unemployment rate is much lower than economists were forecasting. Most had tipped a rate of 5.3 percent or even higher.

This has prompted rumors that the Reserve Bank may not reduce interest rates at the next meeting which I think is completely off the planet.

The recession is biting a lot harder than what those at the top believe, sitting down with clients on a regular basis gives you a pretty good indication of how things are going across a broad cross section.

Companies have been letting staff go as they struggle to contain costs in the face of falling profitability. Our economy has been in recession since the start of last year and has more recently been knocked hard by the global economic turmoil.

NZ still has a lot of pain coming and to ease off on the reduction in interest rates will only extend the time this recession will continue.

Visit the main Professional Investment Services (powered by Financial Gain) here  at www.nzpis.com