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The popularity of smaller commercial properties is keeping their net yields under 5% and they may even go a bit lower

The popularity of smaller commercial properties is keeping their net yields under 5% and they may even go a bit lower

Investment Property Snapshot
 What: A modern, 170sqm retail premises.
 Where: Millwater Parkway, Silverdale, Auckland.
 Selling price: $782,250.
 Net yield: 4.73%.

By Greg Ninness

Smaller retail premises appear to be maintaining their popularity with so-called mum and dad investors, with net yields on the desirable ones remaining under 5%.

The 170 square metre unit (pictured above) at Silverdale in north Auckland, was leased to a dental practice and was part of a suburban retail centre that included a medical centre and other health practitioners.

According to Bayleys' agent Tony Chaudhary who handled the sale, medical tenants are seen as very desirable by investors, along with dairies and liquor outlets, because they are regarded as resilient businesses, even in tough times.

The fact that it was part of a modern complex and located in a high growth zone added to its attractiveness.

It sold for $782,250.

Rent was set at $36,995 a year plus GST and outgoings, which gave a net yield of 4.73% and the lease had almost six years to run.

It wasn't that long ago that investors buying properties with yields below 5% would have been focussed on potential capital gains, but with interest rates so low they are now being sought by investors seeking alternatives to term deposits for a long term income stream.

However raising the  finance might be a problem for some potential investors.

Chaudhary said most of the investors in the market for this type of property could either afford to pay cash or had other assets they could use as security for a mortgage.

The current low mortgage rate environment made the second of those two options particularly attractive at the moment.

Chaudhary said demand for this type of property remains strong in spite of current economic uncertainties and because demand continues to exceed supply, he believes prices may be pushed up a little bit more, with investors being inclined to accept slightly lower yields to secure the properties they want while interest rates continue to decline.

Other recent sales which may have appealed to similarly inclined buyers include:

  • 8B Earl Richardson Ave, Wiri, south Auckland. A 300 square metre warehouse/office with a printing company as long standing tenant providing rent of $50,000 pa plus GST and outgoings. Sold for $1,075,000 providing a net yield of 4.65%.
  • 356 Great North Rd, Grey Lynn, Auckland. A 260 square metre retail/light industrial premises on a 400 square metre site with development potential. Two tenants returning a combined rent of $62,000 pa plus GST and outgoings. Sold for $1,350,000 providing a net yield of 4.59%.

Details including photographs of the above properties and others that have sold are available on our Commercial Property Sales page.

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72 Comments

Re: yields, I have asked the question before, many months ago, but didn't get much of a response. Is 4% the new 6%? Ie. Where 6% gross (generally speaking) was about the acceptable minimum, is it now 4%, because other things like term deposits have dropped to such low levels?
And if so, is this a key reason why the property investor activity seems quite buoyant? Because investors are accepting 4% - much better than a term deposit - aligned with the expectation of capital gain?

I think you're correct Fritz, also the stability factor may be at play - the Equity market is pretty volatile amid high levels of uncertainty so a lower more stable return probably suits a particular type of investor. Also with low debt rates it makes leveraging much more predictable and thus manageable.

Agree Hook

I pity the poor mum and dad investors would are buying into these smaller property investments.

Most don't understand the risk of commercial property, which extend to potential increase in finance costs, defective construction methods, high releasing costs, potentially an extended vacancy period and potential for a large reduction in rental should there be alot of vacancy at the time of releasing. Sounds like a minefield, because it is.

No tenancy is immune to a downturn in business, where they may have to consider relocation to smaller premises or close entirely due to mounting debts.

Its hard to know where to put your spare change these dates, and while these smaller property investments may seem attractive compared to returns elsewhere, remember returns reflect risk and 90% of small businesses don't last more than 3 years. My own view is we are in the period of the business cycle to accept low returns, as downward price adjustments on capital assets are starting to appear in the market.

The market prices got ahead of themselves a while back, and to be sustainable need to be reset to reflect the risks upon us and ahead. If you are looking for those that have created this mess, look no further than the banksters who control the supply of money; largely for their own benefit. Its time some were locked up, based on the damage they cause to wider society.

The bankers just respond to the incentives our dopey bureaucrats and thick politicians place before them. For thirty odd years they have prioritised the FIRE sector and Foreign Ownership sectors (as well as the Central Government and Local Government sectors, of course) over the Productive Private Kiwi Owned sector. So, we have become gradually poorer but delude ourselves that we are wealthier.

If they figure out how to prioritise SME private kiwi owned business over the next thirty years, then all will be well. Eventually we will be forced to do so, unless we choose to polarise into two groups and fight amongst ourselves and become New Argentina.

Roger, it runs thicker than that.

The same ex politicians continue to occupy a number of roles in banks that operate in this country. Its pretty easy to draw the conclusion the system has been corrupted, and Boag's latest escapade is just the tip of the iceberg. Its pretty easy to see why Shipley and Clinton got along. I haven't voted for National in years, yet advocate enterprise rather than bureaucracy. Through dirty politics, they have done a real sales job on NZ inc; and excuse the pun.

But like the winebox enquiry, any further enquiries into past questionable activities will never see the light of day, because it will implicate some of the moneyed men. The narricissist Eptein eposide indicates this runs depth, but with covid these moneyed men no longer have anywhere to run and hide. If you examine Jonkey's behaviours, you'll find alot of similarities to Esptein. Who could forget the ponytail incident. Say no more.

Does that 4% include the various costs associated with ownership? Rates, insurance, repairs? Still much lower than the S&P500 long-term average

As the article said CJ, people may be rotating out of TDs. I doubt those people would be Equity investors, more likely those looking for regular stable payments they can rely on. When you couple efficient tax treatment of commercial property vs FDR and income tax and management fees of offshore Equities , commercial property looks attractive to these people.

That 4percent is gross CJ. As long as the property remains tenanted the tenant usually pays for rates and insurance etc. The key is keeping it tenanted.

Retail shop
As your name suggests you are familiar with commercial leases - rates and insurance are usually the responsibility of the tenant.
The key is as you say is keeping it tenanted. Some issues:
- if the property is vacant then the landlord is wearing the costs of unbudgeted insurance and rates etc,
- to me commercial properties often seem vacant for far longer periods between tenants compared to residential investments, and
- commercial property seems high risk in terms of changing commercial/retail patterns (e.g. lots of small suburban shopping centres seem past their use-by date and remain empty long term).

Yes unlike residential, commercial can be empty for years. Most smaller cities commercial is tied up in the ownership of a few wealthy landlords and they tend to hold out for higher rents regardless of time untenanted.

And the yield will go up as property values decline! What could go wrong.

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According to Bayleys' agent Tony Chaudhary who handled the sale, medical tenants are seen as very desirable by investors, along with dairies and liquor outlets, because they are regarded as resilient businesses, even in tough times.

What a load of rot. Don't listen to these people. If the property is located in a half-empty shopping center, people are unlikely to want to go there. So saying that healthcare is a 'resilient business' is garbage. Futhermore, given that the economic backdrop is unprecedented, saying that commercial property trelated to fee-paying heathcare is somehow 'safe' is also a big unknown. Even before Covid-19, most people found dental costs to be oppressive. That has probably become worse in the past 3 months, not better.

J.C. I think even you will agree that whilst dental care is expensive, when you need it there is no alternative. I also doubt whether going to the dentist is generally part of the mall "experience" you seem to be referring to. The same could be said about medical centres.. they're essential not discretionary hence they make good tenants because their cashflow is pretty secure and "sticky".. meaning constant.

Saying that a dentist's revenue is more secure than that of a video rental store is beside the point. Dentists are like any other business. Economic factors can and do impact on patient visits and the cost of sales.

Actually JC I think you are completely wide of the mark. You're missing the essential vs discretionary factor. Yes both may be affected by economic climate but one vastly more so than the other.

Nope. Discretionary vs non-discretionary is beside the point. There is empirical evidence that suggests that the demand for dental services industry in North America has declined and still hasn't recovered from the GFC.

https://jada.ada.org/article/S0002-8177(18)30798-0/fulltext

Well we're not in the US are we?? They have a different health/welfare system to us. Even in a downturn a community card won't buy you a video but it WILL get you subsidised medical and dental treatment.

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OK. The ol' 'NZ is different' argument. Sorry I don't buy it.

Well then you are denying a fundamental factor. In the US much of it's healthcare is PoD (pay on demand) therefore when people have lowered incomes or are unemployed they can't pay and thus must wait until their health issues become critical. That's what ObamaCare was attempting to address. This is not the case in NZ as I'm sure you are well aware of, so YES NZ IS different.

Ask a dentist. Plenty sitting there twiddling their thumbs. Much cheaper to have the teeth pulled than go for expensive laminates. No sector of the economy is removed from what’s happening (apart from beneficiaries)

Well you still gotta go to a dentist to get your tooth pulled don't you?? which is my whole freaking point!! Whether the dentist is doing high cost procedures or not they are still in business. I've yet to see a bankrupt dentist.. or doctor or physio for that matter. SO QPQ they make good tenants!! Man some people can't see the woods for the trees

You can get your tooth pulled at the hospital for about $50

Maybe so Poppy but my defence of medical tenants in small commercial premises owned by "mum and dad " investors still stands.It's a good stable, essential services tenant.

which hospital is this? public funding means DHB's don't charge us for anything at all.. unless you're referring to private hospitals? In which case it would either be covered by insurance or cost a LOT more than $50..

Edit: deadlink

In my shop the community card buys whatever the holder chooses. There is an amount loaded on it and no one from winz has ever checked back to see that they bought what was approved.

I thought alcohol and cigarettes were discouraged/disallowed? WINZ not checking is just another indication of their incompetence but hardly surprising. Your point however doesn't detract from mine regarding healthcare for the low income/unemployed.

Spoke to a couple of dentists last year based in Perth.... The dentist based in the city suffered a major downturn in business the other based a bit further out not so much.

Re-post of a subject I'm an expert in: DENTISTS:

by streetwise | 22nd Apr 20, 2:33pm
As far as dentists are concerned I've seen it all from the time at primary school when"Toastie" Cook and his stupid friend with the constant guilty smirk on his face pulled the seat away just when I was about to sit down and I broke off half my front tooth when it hit the top of the seat. That and my sweet-tooth and teeth that were small and close together meant that the remainder of my life would involve many trips to many dentists over the next 50 odd years, and I'm still going. I have only 19 teeth remaining and one implant. My broken tooth was replaced with a gold filling by our neighbour dentist. His fingers were too big for my small mouth but after many attempts he managed to attach it with a couple of pins set into the gold filling. During a highschool rugby match against Papakura Highschool I suddenly found my gold tooth had gone missing so I told the referee and he stopped the game and told all the players to get down on their hands and knees and look for it and someone did find it. This was the beginning of my lifelong odyssey to dental clinics. So, I am in a good position to tell you how they have changed over the years.
Up until the 1980s or so a visit entailed getting the plaque scraped of by the actual dentist as he poked and scraped and prodded your teeth for 5 or so minutes. Today, there is a separate 'professional', a hygienist, who takes somewhat longer than what the dentist used to do in 5 to 10 minutes himself, but you are expected to pay $165 to $230 dollars a 'clean', not once but up to 3 times a year!! Even if you've only got far less than the full complement of teeth.
The last broken filling or broken chip of tooth I had repaired cost me $330 plus the 'required x-ray' of $115. I got him to look at another tooth that I thought might need capping and he quoted me 'about' $1600 dollars which was cheaper than another dentist quoted: $2500.
I had just switched dentists from that other dentist because his female business partner had just charged me $560 for a broken filling repair.
Of course, if you change dentists the first thing the new dentist will ask you is 'how did you find out about us'....it's very important for them to know this apparently. This is because they ALL charge these high prices and the only way to increase their revenue is to obtain new customers whose teeth obviously need a lot of work like mine.
And another recent habit I have noticed in recent times is that when they have finished the work on your teeth the dentist ensures that I am all but frog-marched by himself or an assistant straight to the cash register and in one case told to sit down on a chair in front of it, and 2 or 3 of them hang around eyeing me expectantly until I produce my wallet.
So,anyway, I was very surprised when this last dentist texted me DURING THIS LEVEL 4 LOCKDOWN to say that I should come in and get that capping done!!
One dentist a few decades ago broke off the tip of one of his tools in my tooth and left it embedded in my tooth and covered it with a filling without telling me. A subsequent dentist from the old school discovered this and told me. This dentist went ahead and built a bridge to replace my front tooth with the gold filling which was an excellent job and worth the high price but he surprised me by saying he was very worried that once he had done the bridge I wouldn't return. This spoilt my opinion of him and I didn't return.
One dentist near me has expanded by literally having a corridor with many separate clinics on either side to accommodate the huge demand for under-18-year-olds' free dental treatment the government brought in some time ago. I gave that clinic a go to have another opinion on the state of my teeth (which I paid $165 for); I paid up and they gave me a bag with a tube of toothpaste and a few tiny plastic things for flossing my teeth which I thought were freebies. When I got to my car I read the bill and discovered that they had charged me $30 for the toothpaste without even asking me if I wanted it; I went straight back and gave them a piece of my mind and told them I didn't want the toothpaste and got my $30 refund. I have no doubt that all those kids under 18 years also have the $30 tube of toothpaste foisted upon them but of course in their case it would be paid for by the tax payer.
As a good turn I took a Maori chap under the mental health to two different dentists to obtain a Winz quote for extracting a painful molar. As both quotes were well over $1000 dollars I was shocked; both dentists had taken it upon themselves to include a few other things in the quote that we hadn't asked for, but, and this is what really shocked me, one dentist's 'a few other things' were for completely different teeth and procedures from the other dentist's 'a few other things' In the end I found out that the chap was eligible for the dental clinic at Middlemore Hospital where I took him and I gladly paid $40 to have the tooth pulled. They also had a quick look at his other teeth an said that they looked to be ok! So, I can't help but think that this is a scam employed by some dentists on poor beneficiaries who ultimately have to pay the amount back by weekly deductions from their meagre benefits. I have noticed in the past in front of another dental clinic near where I live ( there must be over a dozen within a square mile) there were always two shiny Porsche cars ostentatiously parked outside.....can't be doing that badly!
I remember that tucked away on an inside page of the NZHerald some years ago a journalist who had had his teeth examined by an honest dentist whom he knew, went around a few city dentists and got itemised quotes for work they deemed needed to be done: what had to be done and costs varied extensively between the dentists thus 'surveyed', and quite a few quoted for work that did not need doing.
In summary, I do think there are dentists out there, more than there used to be, that are noticeably ethically-challenged shall we say.
(I have other 'experiences' that I haven't mentioned.)
So, I'm looking forward to the new world order when such entitlement isn't the norm, and dentists concentrate on doing a good professional job for a fair and reasonable reward instead of so conspicuously, unashamedly and unprofessionally chasing the dollar.
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by Drofstun | 22nd Apr 20, 2:59am
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lol as the kids say. enjoyed that monologue
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Wow - enlightening post - thanks for putting the effort into that. Will keep this in mind.

Thank you, appreciate the experiences you've shared here.

"Chaudhary said demand for this type of property remains strong in spite of current economic uncertainties and because demand continues to exceed supply......."

Much the same might be said of residential property - especially fee simple houses located in preferred areas.

Despite the battering of Covid-19 and winter, the vital signs of the housing market remain strong.

TTP

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"Despite the battering of Covid-19 and winter, the vital signs of the housing market remain strong."

Honestly TTP, as many have said on here and elsewhere, we haven't got into the danger zone yet. That will occur once wage subsidies and mortgage holidays end, which as you know full well, will not be until September.

Let's say you're on a wage subsidy and loan holiday that ends Sept, and you haven't been able to find alternative employment (anyone who works in tourism, or who has clients in tourism—including giants like AirNZ—as well as the entire retail and hotel sectors, will be affected). Your $1,000-a-week mortgage is no longer sustainable and so you decide to list the home and take a more modest property, or rent, until the dust settles. It will take at least 6 weeks for those people to accept the reality of reduced price gains and price their home to the market. If the home still doesn't sell after 6 weeks on the market, we will see prices slashed to the value of the outstanding debt (i.e. probably around 20% below what they are now). Those that don't move quickly enough could end up in trouble so we will probably see some REOs (repos/foreclosures) too. This means we will not see the real pain until Oct/Nov 2020, and it may even be a wee while after that, although signs should be expected Sept.

I am certainly not wishing ill on anyone, and am in a position to buy right now, liking the look of the rates. But I will certainly not be jumping into this market until at least the end of the year, more likely Oct 2021, a month which has been the lowest price point in Hib Coast for at least the last 2 years. In the UK, loan rates are around 0.5%, so I don't believe there is an urgency to jump into a mortgage yet. The NZ market will require propping up for a while and I doubt we'll see 5 or 6% for some time to come. Enjoy the show, let us know when your offer is accepted.

Hi Big_Data,

Sales volumes and prices of houses remain strong. As noted above, the vital signs of the housing market are good.

Just a few months ago, many people here were telling us that this winter would be a bloodbath for the housing market. Clearly, they were wrong - though they struggle now to admit that.

I think the next year might show some price weakening in the housing market....... But it will not be as severe as many people hear enthuse.

Good property will continue to perform well across the long-term.

My advice to you is that as soon as the right property comes along, go for it.

TTP

Unfortunately I have to agree with TTP. The regions are on fire so if you see a house you like and can afford it buy it. I am not so confident with commercial investing however. You really need a tenant to be an essential business to be safe there. I certainly did not expect housing to be so strong after lockdown finished.First home buyers are certainly going to struggle as they are competing with investors and ex pats returning home. Labour is no better than National in terms of helping people into their first home.

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Oz property industry heading off a cliff. But thats ok cos we r diffrunt.

https://www.theguardian.com/australia-news/2020/jul/09/lending-on-new-ho...

The mere fact that you can't string a sentence together without your barbarian abbreviation and syntax makes it somewhat irrelevant

Over ones head old chap? I am sensing a panicky anger. Overstretched oneself did one?

Not at all, just have a deep seated dislike of this "new age" version of discourse.. it's just lazy, in my opinion. I also have observed you're more intelligent than that post would indicate, so just giving you a windup. The Aussie housing stats are yet to play out fully, and at the end of the day what happens in Australia may, or may not, happen here. Our economies are based on different drivers

Different drivers of economy between NZ and OZ... both highly reliant on China for export $$ and I would take a guess tourism in OZ was also a major contributor to GDP.

If you dislike the discourse, then perhaps you shouldn't be down here mingling with the 'steerage class', as you like to call us.

See now there you go reinforcing my quantifying of "steerage class" You failed to actually absorb what I said, and failed to read and fathom my comments.. I never said I disliked the discourse. What I said was I disliked the delivery of it, and then I also said I was winding him up. Maybe you and J.C could do an "OK Corral" thing, shoot from the hip and see who's still standing

> Not at all, just have a deep seated dislike of this "new age" version of discourse

I don't see how to read this other than as you saying you dislike the discourse.

ex agent
FHB are also struggling with tighter bank lending conditions.
Although LVRs have been removed and mortgage rates are down further, FHB are not benefiting from these.
Key issues are:
1. They have become a lot, lot tighter on both one's income security and job security - e.g. casual relief teachers without confirmed hours are being downgraded or ignored, employment with risky companies also downgraded
2. Low LVRs typical of FHB have a premium added on carded rate (investor high LVR are given special low rates below carded rates)
3. The 6.2% to 7% interest rate test is still being applied.
Banks are protecting themselves and being far more conservative in their lending to the disadvantage of FHB and advantage of investors.

The bankers and politicians have always been very disappointing. The politicians say they are going to do certain things but never do them . Hence child poverty and housing affordability are still a problem. Bankers are always looking to the easy safe deals. Hence they favour investors to the disadvantage of many first home buyers who just need someone to give them a chance. This country will have the same old problems no matter who wins the upcoming election. Just look at how many members of parliament own rental properties.

Ex agent.. I don't remember anything being written into NZ's statutes that FHB's were actually owed a house or special treatment to gain one. When I bought my first home in the early '90s (at 15% interest) it was hard slog and no spare cash. I fail to see where the "charity factor" constantly requested by some commentators has any relevance. Buying and owning your first home has ALWAYS been a risk and hard work.

We should not be ignorant of history.

Home ownership affordability in NZ only came about through massive efforts of both private and government, especially in the post-war decades. No one who received affordable housing did it all on their own two feet.

Given the effort made to provide it to you, perhaps it's fair that efforts are made for home ownership to be affordable for other generations too.

Looking for someone to blame for housing costs RS

Looking for some awareness of history HW

"What a load of rot."
A very common knee-jerk response from you JC. Does it give you credibility

He does seem to shoot from the hip, with the resultant shots being somewhat wide of the mark. useful for banter though.

In general, one of the reasons for a higher net yield with commercial vs residential is that commercial has a higher risk factor in that in a downturn commercial can be vacant whereas residential will almost always be occupied as you always need a roof over your head (and can move the business into the garage maybe.)

I think the key is in the headline, 'Mum and Dad investors,' who may well be buying a building that will be vacant in another 12 months.

The back headline to this could well be, 'Professional investors get out before market collapses (by selling to naive Mum and Dad investors).'

I think the article was using Healthcare businesses as an example which was very valid. Commercial Retail or Office, indeed even Manufacturing can be quite exposed to a downturn, very true. Residential has lower yields due to the higher ongoing costs, both maintenance and compliance plus for "mum and dad", the management costs. Also the rent/lease is higher on commercial property which obviously affects the yield. $700+(+GST)/wk and rates for a $780K building isn't bad.

The commercial property supplying laundering or warehousing services for a public hospital is a far more attractive proposition than the facilities of a GP or dentist in Silverdale of all places.

Well, I think those types of properties would be a bit priceyer than a single tenant building similar to the one in the example. They are talking "mum and dad" with maybe 1.5mil to spend. The article also spoke of the medical/healthcare type tenants being viewed as stable. I think you're getting a bit off track. The type of properties you are talking of above are probably more suited to professional investors.

We had an empty building in our town sell to investors 2 years ago. Sat empty for lease for two years and has just sold again to some other investors at a profit. Still empty.

Commercial properties are not as easy to manage as some imagine. Vis-a-vis the recent commercial landlord and tenant negotiations related to lockdown as highlighted in the news for those who followed it. That is just the start, so not for faint hearted investors. The retail shops we had were located in a dodgy old building with a history. We got rid of them quick smart and I have less stress and more time. A nearby block of shops has remained empty for 3 or 4 years plastered with for lease signs, the rich old owner obvs doesnt care about the massive loss of income.

It amazes me how the owners don't care about how long they sit empty. We have a large retail building in our centre that has sat empty for 10 years. Imagine the rates and insurance payments over that time.

Been told they could have leased to a very good 'blue' tenant as an office space but the landlord was unwilling to do the low level of work required to make fully usable.

Just so you know, virtue words seem to be a very common source of propaganda in this country. From "mum and dad investors", to "property ladder".

More accurate descriptions might be: "landlords", "property investors", and "debt treadmill".

https://en.wikipedia.org/wiki/Transfer_(propaganda)

There have been over 4000 new commercial leases come on to the market in Auckland on Trademe since the start of Level 3. Numbers continue to rise with now over 12,000 commercial properties available for lease. Takapuna for example has over 300 leases available which is very high numbers. Can't see many businesses going into many of these properties any time soon as the environment has significantly changed on so many levels. Expect to see many come up for sale next year when they can't find tenants.

Yes, I would think commercial property is a risky proposition going forward. Takapuna has already been sketchy for a long time. Last time I was there I was in the fantastic offices of Nielsen on Hurstmere Rd. Incidentally, the stock price of Nielsen Holdings is down 70% in the past 3 years. Wonder how much longer they have as a business. Some of the hospo business in the main shopping drag mist be doing it real tough.

I lease a building in avondale. There have been a fair few business fails post covid, plenty of vacancy. If you need a solid ongoing return I would say commercial property is a bad idea.
Some equipment bargains to be had now post these fails.

This is what the RBNZ wants - force current cash investors into riskier investments, to prop up current asset prices.

Of course the greater "mum and dad" participation in the asset class will mean broader demand for bailouts next time. Round and round we go...

Notice how people refer to "ma and pa investors' and "professional investors" as if they're mutually exclusive. This is quite common in NZ and Australia considering the extent to which property has been financialized. At the end of the day, if "ma and pa" are not "professional", then they're obviously ripe targets for the hawkers. "Ma and Pa" are told this property is optimized for a dental surgery, a "safe business." But what do "Ma and Pa" know about the businesses revenue stream going forward? How do they know the business' revenue might fall 20% or even more? Do they understand that rent is a cost of sales and a tenant will look for every opportunity to control costs?

JC please change the record to reflect either a) some positivity ( I know that's gonna be a push) or b) something even marginally insightful.. you're getting pretty boring

"Marginal insight"? About the future revenue earning capacity of small SMEs renting commercial properties? Might be boring to you, but it's not to me. What is more boring is the "I reckon" approach to understanding it all.

We did not get any direct bailout money and landlords were excluded from the small business loans scheme.

Anyone who has money in the bank is effectively now losing buying power of their savings, due to inflation. 1.6% before tax is a terrible rate, and I can only see it dropping. No incentive now to save money in the bank. So many people seem to be buying properties now as a result. Houses are selling fast, because I think so many people see them as a safe investment, because even if the housing market does collapse, you still have the property. But property prices are now mad. Whereas if you have your money in the bank, and the bank collapses, the saver may take a haircut and lose money, due to NZ being one of the few countries without deposit insurance. Savers can't buy deposit it insurance. Madness IMO, considering people can insure their building against loss for a fire or natural disaster.

Yes I agree but you make it sound like its an uneven playing field. Homeowners and PI also lose capital too if the market goes down and let's face it that's the time that banks might fail. They don't fail when prices are rising.

Just more of what we've been seeing for the last 20 years. Lower and lower OCR. An ever lower returns world. Money sloshing around looking for a home.

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