fbpx

Real Estate Investment for value growth

For the past 7 years or so, funds on bank deposit have earned reasonably steady interest income. But after a downward trend over the last few years things took a turn for the worse in 2019 when the reserve bank lowered the official cash rate, and then again in response to concerns over the Covid-19 virus.

If one was to leave enough money in the bank for immediate cash needs and then seek better returns elsewhere, what options are out there for the canny investor?

 

Shares in public companies, shares in private companies, commercial real estate, residential real estate, government bonds?

Whilst there is no doubt that share portfolios have performed well over the last few years, the recent impact of Covid-19 has highlighted the relative risks associated with such portfolios. 


In the meantime, many individuals have generated significant wealth in the last few decade from value increases in land holdings, and this trend looks set to continue. We are seeing the “smart money” looking for investments in land as a way to achieve long term value growth.

*Source REINZ HPI Index

Land in the form of residential sections does have several advantages:

  • None of the hassle or risks normally associated with tenanted property
  • No insurance costs
  • Significant long term growth in value – especially in regional New Zealand
  • Significant leverage and ‘early mover advantages’ if buying off plan
  • Significant leverage on the growth in value if debt is used, particularly in our current low interest environment
  • The ability to sell in a timely manner - sometimes even before settlement has taken place

The demand for new residential sections seems to be secure. The data for the 16 years from 2004 to 2020 shows that Kinloch has absorbed an average of 44 new sections per year. This is underpinned by the population increase in New Zealand and the internal migration of kiwis to some of the more relaxed areas, such as Taupo and Kinloch. There is no doubt that new sections in high quality developments are increasingly becoming a secure and attractive portfolio option for many investors.


Kinloch stacks up well compared with other locations. In addition to offering residents an active lifestyle, Kinloch is a seen as a secure and safe community, located just fifteen minutes from Taupo. As Taupo district continues to grow, and with increasing demand for properties in Kinloch, we can expect to see values continuing to increase, offering astute investors significant medium to long term returns.


In short, investing in residential land in the beautiful and safe community of Kinloch looks like a very good bet!


Disclaimer: This article has been prepared by Bruce Bartley, a resident of Kinloch and who has involvement with three land projects in Kinloch.

Earn a 5% return on your deposit while you wait.

All of our Seven Oaks residents will receive a 5% return per annum on their deposit until settlement.

Enquire

This is the place where the next generation of proud Kinloch residents will live, grow and prosper. Come and join us.