Friday 2nd July 2004 |
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Strongly rising house prices, particularly in the main centres, have put many people with well located but otherwise unspectacular homes within a hair's breadth of obtaining millionaire status. Many more have used the rising equity of a family home to leverage themselves into the investment property market.
The residential property boom has produced a frenzy of buying and selling that has considerably boosted the fortunes of two groups that appear in this year's Rich List real estate agents and developers.
In the year to March, nearly $33 billion of residential property passed through the hands of the country's real estate agents, providing them with an unprecedented bonanza in commissions.
Probably no other company has benefited as much from this boom as Barfoot & Thompson, the privately owned real estate agency that has continued to strengthen its grip on the country's biggest real estate market, Auckland. Over the past year, this company handled sales with a combined value of $6.3 billion, making it one of the most successful privately owned businesses in the country.
Similarly, the Bayley family has done extremely well from the real estate company that bears their name.
The property boom has also brought several new entrants on to the Rich List, such as Auckland developer Nigel McKenna, responsible for many of the new apartment developments in and around the city's waterfront.
However, most of those who are wealthy enough to appear on the Rich List do not invest large sums of money in the residential property market beyond their own often-spectacular homes. For them, commercial property provides more attractive opportunities.
And this sector has also provided handsome returns over the last year.
Latest figures from the Property Council show the average total return (capital growth plus income) from New Zealand commercial property over the past year was nearly 13%.
But individual segments within the commercial property sector have performed even more spectacularly. The strength of the retail sector meant many retail properties provided their owners with total returns exceeding 18%.
While many commentators are picking the property market to cool in the coming year, this is not expected to cause a slump. Most of the property barons who appear on this year's Rich List appear to have built their fortunes on firm foundations.
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