Property still a good earner

By TOM CLARKE

A large number of people still have money to invest in good-quality commercial property, even though there is a swing away from property now, says property specialist David Schwartfeger.

Property remains one of the most stable long-term investments, says Mr Schwartfeger, who has just been appointed general manager of Prince's Wharf Management, the property management arm of Kitchener Group's waterfront development.

"A well-managed commercial property still provides a very good return to the investor, whether it's managed by an investment fund, by a commercial property owner, or by an individual owner.

"Residential properties can return about 4 or 5 per cent, but commercial properties and CBD properties offer a lot better return, and are often guaranteed."

The fact that New Zealand is a small player in the world property scene and that overseas investors have been hurt by recent exchange losses from the fluctuating dollar, means innovative local investment must be relied on more, he says.

A large number of people still have money to invest in good-quality property, but there is a lot of competition for the investment dollar from other options.

He says people tend to swing in six-monthly cycles between various investments.

"People are tending to swing away from property at the moment with the things that have happened with Waltus Investments, but there are still good companies out there, like Kiwi Property Income Trust, which is a good solid company that is working hard to put money into shareholders' hands."

Mr Schwartfeger says methods of financing and holding property will change.

In the 80s there was a trend towards Asian investment in property syndication, he says, and in the 90s Treaty of Waitangi settlements provided another stream of funding.

Individuals are now emerging who retain ownership of major projects, such as Princes Wharf, through multi-level financing rather than syndicated unit-title ownership. Long-term property investment is also being financed through avenues other than traditional lending institutions, such as bond issues.

Mr Schwartfeger holds a bachelor in property management and did post-graduate research in commercial property investment at Lincoln University.

He also studied in the United States and worked there for a time. On his return to New Zealand he joined Bayleys Real Estate and later Jones Lang LaSalle, heading its Wellington office.

He is now responsible for the commercial property management and marketing of the $200 million Princes Wharf redevelopment.

The 8ha site includes 297 apartments and a wide variety of commercial leases.

These range from restaurants, retail and office space, to the Hilton Auckland Hotel, which is due to open early in the New Year.