Auckland tribes, in the process of settling, have first rights of access to land and are looking for partners. Photo / Supplied
Auckland tribes, in the process of settling, have first rights of access to land and are looking for partners. Photo / Supplied
The commercial property market needs to increasingly take note of where Iwi plan to invest their treaty settlements, Ward Kamo, Bayleys Tu Whenua director.
"Since the first settlements of the 1990s, the value of Iwi assets has grown to almost $8 billion. Those at the front of the queue for settling their claims have the largest asset bases but as other settlements occur, the value of the combined Iwi asset portfolio will grow significantly," Kamo says.
"That means for people and businesses wanting to invest in New Zealand, Iwi are key partners."
Kamo believes investors should be focused on Iwi that are settling.
"In Auckland alone, there are 13 tribes that are in the process of settling. And whilst they may only be settling for $12 million, they have extraordinary first rights of access to land in this city and are looking for partners that get their mindset and are prepared to take the long view," he says.
According to figures collated by economic consultants TDB Advisory, the collective asset base of the 70-odd Iwi that have finalised Treaty Settlements with the Crown rose by $1.8 billion in 2017 to $7.8 billion, driven in part by six new settlements finalised in the past two years totalling $222 million, and the above average returns on assets owned by Iwi that have a strong bias towards property investment.
TDB Advisory's Iwi Investment Report 2017 found that the debt levels of many of the Iwi groups profiled were non-existent, with only the most active investors, Ngai Tahu, Ngati Whatua Orakei and Waikato-Tainui, recording debt of between 10 and 17 percent — relatively low compared to the debt levels of most New Zealand companies.
The two largest commercial property players among Iwi are Ngai Tahu and Waikato-Tainui, both of whom have made major plays in their respective property markets. Their success suggests a way forward for Iwi looking to grow their assets through commercial property.
Ward Kamo, Bayleys Tu Whenua director. Photo / Supplied
The key for many Iwi is how to maximise their opportunities, Kamo says.
"The commercial property sector provides a sound investment option for many, with a steady outlook on growing returns in a growing economy.
"Tougher bank lending criteria will have a role to play in Iwi plans. In the current market, those with relatively clean balance sheets will be able to flex their muscles. But the issue Iwi will face is capacity. Yes, they are price setters, but they still have to gear up. There are plenty of opportunities out there, they just can't act on all of them, which is a good position to be in."
Kamo says when working with Iwi and the Maori business community, there are extra layers of complexity that can be missed if not truly understood.
"Iwi consider not only the economic returns of a potential investment but also the social and cultural benefits. The balancing act is critical," he says.
"Some classes of assets simply won't produce commercial returns required of an asset management or holdings company. Equally, some classes of assets are required to be held by Iwi to support their social development aspirations. These assets still require the expert management of commercially-minded people and businesses.
"Family values play an important role in identifying a pathway for success for descendants and whanau. Most Iwi leaders carry the weight of their peoples expectation on their shoulders. Accordingly, they will take commercial views that are not always market return based.
"Further, the long inter-generational view Iwi take will influence their investment return horizon as well. The saying 'Whatungarongaro te tangata, toitu te whenua' sums up their thinking: 'People disappear from sight but the land remains."
Kamo says that many Iwi take the view that Maori should be in the business of accumulating land. "Their point is that in a hundred years' time, the tribes will have accumulated so much land that they'll be in the position they were before 1840. So for some Iwi, low returns on land and property investments isn't a huge concern if the over-arching goal is land accumulation. Iwi investment horizons could be so long that price doesn't really come into it," he says.
"But equally, investment in land has to be done with an eye on growth. Iwi have to look at property from a yield perspective, or as a means to achieve the over-arching dream, which is to retain all land. The short-term play may be to trade for the long-term gain."
