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September 2008 Finally! After a number of months of media doom and gloom the market confidence is picking up. There are great signs on the horizon in regards to the market in general and in particular Marlborough Tourism and business. The NZ dollar is slowly sitting down again, beefing up our export market and general economy with domestic business and consumer confidence building again. There have been two months of solid growth in retail spending which means Kiwis are getting back into life with more action and less waiting to see. Interest rates are now scaling back, with more cuts expected, although possibly not as great of cuts as are promised. Commodity prices are gaining ground as focus shifts to failing financial institutes and government bail outs, boosting confidence in other market sectors. There is debate around the government bailing out financial markets and I believe it creates a false bottom - a bandaid on the wound - and it will only prolong rather than fix any underlying issues. In Marlborough we are seeing a growth in buyer enquiry across the board with more international interest coming this way. Marlborough is proving itself a fantastic retirement region offering lifestyle, income producing business and diversified economic drivers such as forestry, marine farming and viticulture as the majors, among others. My homework tells me we could expect a year of growth, not as we have seen recently, but growth. Marlborough should see an advantage in the export markets as the US free trade deal comes through with the US being the third largest client of NZ wine - Marlborough producing the bulk of that product. All in all, Spring is bringing a bit of sunshine in the market. June 2008 Is the market now improving? While there is concern that this coming year could prove to be worse again economically, I have seen an increase in activity among the cash operators. It would appear that there is currently a window of opportunity to secure a good deal. May proved to be productive also with $18,000,000 worth of contracts for us here in Bayleys Marlborough. WIth the weakening of the NZ dollar and the bank reserve rate looking to come down to around 6% by 2010, according to Tony Alexander of the BNZ Bank, it would appear that there will be better working conditions ahead. The question is; if interest rates drop will returns also follow suit? If that historic premis continues, and so it should, then now would be the best time to be securing a profitable business. These returns are available based on competition with bank investments returning around 9%. Should that go down to say 7% then purchase prices will reflect a competitive return of perhaps 8%. Now is the time to buy profitable businesses wouldn't you agree? And yes, I do have a few offering over 10% returns now. Wine Marlborough see the viticulture industry here as a major if not 'the' major economic driver, with plenty of scope to continue en route as a leading brand internationally. The flow on effects on the accommodation, business and tourism sectors are evident and looking good going forward. May 2008 Recently we have seen a slight increase in interest rates with the expectation that they will decline... but not quite yet. According to Tony Alexander of the BNZ pessimism in regards to the economy has eased to just 49% down from 55% in April and 62% in March. I'm not sure how to take that with only 1/2 of us waiting for the economy to crash..hmm I say the glass if half full! There are always opportunities in every market, media tends to illumnate the trend, if even a slight one and in this case the mortgagee sales. There have been mortgagee sales since Adam was a boy - they come and they go with the good judgement of many. The cycle continues and we all get back to business, I expect we will see the usual effects of winter and then a nice return in Marlbrough to a healthy market of tourism and immigrating and relocating cash buyers who don't mind the sunshine, the sounds and of course the odd glass of the best wine in the country. April 2008 We are entering a new and exciting market for some, and an increasing realisation-of-a-market for those who have over-exposed themselves financially. There will be some excellent buying opportunities up ahead but that's not to overlook that the Marlborough region was still increasing in value by a generous 8% last time I looked. This month has seen an increase in business enquiries as the flavour of the month over other investment vehicles. Financial lending is playing an influencing role in most cases but people with cash will always have cash, and this is their market. An associate said it to the point recently, '..this isn't a market for order-takers any longer..' |
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