Sunday, April 26, 2009

Plus points for NZ: lovely scenery and cheaper loans

New Zealand may not be the first place that springs to mind for property investment, but the depressed market makes it a good time to look at the land of snow-capped mountains and golden beaches.

Ms Sue Charlesworth, marketing manager at Southern Lakes Real Estate, told The Sunday Times: 'The prices have certainly come down from the levels of 18 months the New Zealand dollar isn't very strong at the moment, hence overseas investment becomes more feasible.'

A year ago, the kiwi dollar was worth S$1.07 but it is now down more than 20 per cent to 85 Singapore cents.

Ms Charlesworth said the reduced cost of lending in New Zealand is also helping to make property investment at any level very accessible.

Prices are expected to remain relatively stable for the next few years, buoyed by increasing migration to New Zealand but capped by rising unemployment.

Residential property expert Andrew King, of Andrew King Property Management Services in New Zealand, believes that it could be a good time for investors to consider putting down money, as 'cashflow is good while interest rates are low'.

'An investment in New Zealand property would be a long-term hold as prices are not expected to increase for at least three years,' he added.

Several New Zealand 'island-like properties' are being advertised on the website of Vladi Private Islands, which markets islands worldwide.

There are national sensitivities involved in the acquisition of such rare locations and they are protected by rules and regulations.

But the New Zealand government is planning to overhaul the Overseas Investment Act this year. This regulates the acquisition of 'sensitive land' by overseas investors.
Reforms may make it easier for foreigners to buy property.

Bayleys Real Estate managing director Mike Bayley suggested some unique locations Singaporean investors can consider.

'For personal investment and for use as holiday homes, there are properties scattered throughout the country in locations ranging from islands, remote beaches and lakes through to snow-capped mountain lodges.'

He said most international investors are in the main cities of Auckland and Wellington, where there are large-scale residential investments.

In Queenstown, a small town by a picturesque lake surrounded by snow-capped mountains in South Island, Ms Charlesworth said an investor would need at least a NZ$250,000 (S$210,000) deposit for a managed apartment.

Such properties are rented out to visitors most of the year and are managed by a property company.

For a high-quality residential property, which is considered to have solid, predictable returns, at least NZ$450,000 would be needed.

More expensive residential investments generally require considerably less capital investment as a percentage of the total purchase price than managed apartments. This is because banks are more willing to offer loans for these types of properties.

Source: Straits Times, 26 April 2009

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