Category Archives: Pro Experts

Hawke’s Bay’s leading professional service advisers & leaders

Celebrate your people and team successes

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Let’s Celebrate! In the face of inflationary pressures, interest rate rises, cyclones and uncertainty, it is challenging to rise out of the mire and celebrate the good in our organisations and people. Too often it’s the loudest voice, the trickiest staff member or the latest crisis that takes all our time, attention, and energy.

If morale ever really needed a boost, it is now! It is therefore timely to reflect on how we celebrate the wins and the good performance in our organisations. Unfortunately, it seems a natural and accepted Kiwi trait to not sing praises. We are stingy or subtle with our “thank-yous” and praise and are risking becoming a “thankless” work culture.

A recent HR Trends 2023 survey suggests that more than a quarter of employees believe that they aren’t rewarded or recognised for good work. This statistic is surprising in the tight talent market where finding skilled people is such a challenge. Employers should be pulling out all stops to keep team members motivated and engaged.

Moreover, in a world where New Zealand now sits at the bottom of the OECD in terms of productivity, keeping high-performing teams and employees motivated and recognised needs to become a priority.

Why Celebrate?

According to Gallup, both meaningful public and private recognition are bigger motivational perks than being given a promotion, bonus or raise.

Evidence also suggests that employees feel encouraged to do better work if they receive personal recognition and people who feel recognised are more than twice as likely to innovate and bring forward ideas. It also has a strong correlation with retention. There is also now strong scientific evidence behind the benefits of giving gratitude – it increases happiness, reduces depression, increases resilience and it has proven health benefits such as lower blood pressure and better sleep. Gratitude rewires our brains and it kickstarts the production of dopamine and serotonin, our feel-good hormones – effectively it’s an antidepressant.

So let’s Celebrate… Great leaders take the time to notice and reward great work, but we need to celebrate more than just a job well done or a project completed. Celebrate what you value – look to a situation well handled, organisational values demonstrated, a significant first, courageousness demonstrated, truly exceptional work, consistently good work done, when someone made a difference to someone else, or even a major mistake or failure where it revealed a key learning (see TedTalk The unexpected benefit of Celebrating Failure).

How to Celebrate…

 

 

 

 

 

 

 

 

Say “thank you”! It’s free and it feels great for all concerned.

✓ Start meetings with a quick acknowledgment of wins or achievements.

✓ Build a feedback culture. Don’t wait for an annual review – have regular one-on-ones with team members. The same equation for negative feedback works well for positive feedback and makes it more meaningful (see the accompanying diagram for more detail).

✓ Create platforms for crowd-sourced feedback and celebration. A shared platform allows leaders to hear great stories they may not know about.

✓ Invest in development – it acknowledges a person’s value and is a key retention strategy. Your high performers should have a tailored development plan that is revisited regularly and includes a range of development initiatives from mentoring, coaching, shadowing and secondments through to more traditional training programmes.

✓ Encourage the innovation and input of high performers
by increasing responsibility and autonomy as a means of investing in development.

✓ Have some fun. Our staff spin a wheel to win prizes after various achievements. This can include serious and fun prizes.

✓ Take a break – celebrate during the workday with short breaks as a team – summer ice-creams in our office are a big hit.

✓ Use social media to share success stories.

✓ Move after-work events into the workday. There is a major shift in workplace culture where employees no longer want to use their after-hours time for workplace events as it impedes on time with family, friends or recharging. Use lunch breaks or finish work slightly early for a celebratory social occasion.

✓ Lastly, if it’s all about the bottom line in your organisation, then now is the time to put bonus structures or profit share schemes in place.

All of this points to being more considered in your approach. Its more than just having a programme, but sometimes having one in place will mean you are active and conscious about your initiatives. A final word to the wise – don’t overdo it. Good recognition should be natural and authentic.

For assistance with human resources initiatives including teams, leadership, investigations or facilitated meetings, please contact hr-consulting-hawkesbay@bakertillysr.nz

Considering buying a business?

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While there is a constant stream of businesses coming up for sale, the tricky bit is knowing how to assess the best business opportunity. As long as you ask the right questions, it should be fairly straightforward. Here’s the good news. I’ve compiled some of those ‘right’ questions for you. Before making a final decision I encourage you to seek professional advice and carry out due diligence.

Customers
What are the demand drivers within the existing markets the business sells into or services? Is it discretionary spending or essential products or services? If discretionary – does their target market have discretionary funds to invest? Also what are the market trends?

Customer Risk
How is the business spread across its clients? Generally the wider the spread the lower the customer risk.

Service Business
Service businesses will have fewer issues in respect of supply chain considerations, but their use of staff and contractors will be critical components to review. Product Business
Is there diversity of product supply available? If not, is there sufficient “buffer stock” to see the business through difficult times? Who are the competitors and what are their strengths and weaknesses?

Competitors
Any likely change or addition to the competitive environment – either by other providers of a similar product/service or a new generation product/service that could upstage demand for the target business outputs?

Staff
Review the historical acquisition and retention of staff – is there longevity or quick turnover? What is the essential culture of the organisation? Will your management style suit that culture? Is there a critical staff member that simply has to be retained?

Plant and Equipment
Understand the condition and market value of the business assets. What are the forecasted repair and maintenance expenses? What level of capital expenditure will be required to upgrade assets? Consult an accountant regarding depreciation considerations.

Stock
Check margin against stock turn – generally these figures have an inverse relationship i.e. high margins – low stock turn. Is there old or slow moving stock that should not be valued? Who has responsibility to move old or obsolete stock – vendor or buyer?

Systems & Intellectual Property
Is there measurable business goodwill as opposed to personal goodwill attached to the outgoing owner? Are there operating manuals? How long can the business operate without the owner?

Gross Margins
Can the business adjust pricing to reflect increasing wages and/or operating expenses? If importing, can product pricing be increased to offset increased freight costs and/or a declining exchange rate?

Cashflow
‘CIMITYM’ – Cash is more important than your mother. Is the business cashflow positive from day one or is there a need for significant working capital? This all impacts on the total cost of ownership.

Business Value
Does the business earnings multiple fairly reflect both historical and potential future trading? Does it take into account working capital, capital expenditure or cashflow requirements? What have businesses in the sector sold for recently?

Regulatory Environment
Are the rules about to change? Will the business be impacted by changes to local or central Government policies or budget changes to that sector? Will the regulatory costs soon increase (or decrease)?

Which personal investment strategy is right for you?

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For anyone with an eye on the NASDAQ and S&P500 markets, you might have noticed big global tech names like Apple, Amazon and Google are all up 40-50% year to date. But most notably, the chip maker Nvidia is up more than 150% year to date, all heavily weighing on the overall market direction. Hindsight makes things crystal clear when we see who the winners and losers are after watching companies go boom or bust in unstable markets.

But without a crystal ball to make future investment decisions with, how you choose to participate should ultimately come down to your personal investment goals and tolerance to risk. There are two key investment strategies that both have their advantages and disadvantages, and their effectiveness may vary based on market conditions.

So, which one might be right for you? Active Investment strategy Active investing involves handpicking securities to try to generate superior returns or outperform a benchmark index. It relies on the belief that skilled investors or managers can generate superior returns by closely monitoring market trends and analysing financial data to identify undervalued assets.

Active Investment strategy

The appeal of active investing is the potential for higher returns (for example, if you bought Nvidia shares on the 1st of January 2023). Skilled active managers may outperform market averages, generating alpha returns (returns greater than the index). Active investing also offers the opportunity for personalised decision-making, as investors have direct control over their portfolio compositions. This flexibility allows for tactical adjustments in response to changing market conditions.

What to keep in mind Consistently outperforming the market is difficult as it requires accurate timing, stock selection skills and the costs associated with providing these. Passive Investment strategy Passive investing aims to mirror the performance of a specific index by holding all or a representative sample of securities within that index, mainly through ETFs (Exchange-Traded Funds). In this approach, passive investors benefit from broad market exposure and reduced stock-specific risk by holding a diversified portfolio.

The appeal
The appeal of a passive investment strategy is in its simplicity, reduced management cost and certainty to achieve a market return.

What to keep in mind

Passive investing is a long-term strategy, requiring investors to ride through the market lows and highs, continuing to remain focussed on the long term goal.

What else should you consider?

Understanding fees and the difference between each strategy is very important for investors as it can impact long-run performance. Being overly active could eat into returns due to transaction costs, and so too can high active management fees (performance fees especially). Conversely, being subject to above-market passive management fees can impede the ability to mimic the targeted market index return.

A common approach in portfolio construction is to incorporate both active and passive strategies. Utilising an asset allocation framework, investors can include active or passive strategies to target the best result within each asset class. For example, using a stock selection method for NZ equity exposures, where the market is smaller so investors can be selective with what to own and what not to own. Whereas for global equity exposures, investors could use passive ETFs to diversify across markets to gain greater depth of exposures. Ultimately, a consideration before chasing outperformance using either an active or passive strategy is to ensure a robust investment plan is in place that reflects investment objectives and risk tolerance. Having structure around when or what to add/reduce or buy/sell can turn out to be far more important to meeting investment goals than being 1-2% above or below the market.

Andrew Atkinson is a Wealth Management Adviser at Jarden’s Hawke’s Bay office where he provides strategic investment advice and portfolio management to individuals, family trusts and charitable trusts. Get in touch if you would like to know more:
www.jarden.co.nz or +64 6 877 9074

The information and commentary in this article are provided for general information purposes only.  It reflects views and research available at the time of publication, using external sources, systems and other data and information we believe to be accurate, complete and reliable at the time of preparation. We make no representation or warranty as to the accuracy, correctness and completeness of that information, and will not be liable or responsible for any error or omission. It is not to be relied upon as
a basis for making any investment decision. Please seek specific investment advice before making any investment decision or taking any action. Jarden Securities Limited is an NZX Firm. A financial advice provider disclosure statement is available free of charge at https://www.jarden.co.nz/our-services/wealth-management/financial

The value of history

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When Damon told me that this issue of The Profit was going to feature 150 years of Hastings City and look at some of our longest established business, I thought it appropriate to dig into the Harvey family history, as there has been a long association with the Harvey family providing real estate and property valuation services since they stepped off
the boat in the 1870’s.

In fact, the Harvey family, who originally came from Cornwall were involved in property there too. You could say property is in our DNA. It all started when Elizabeth and Thomas Harvey sailed from Cornwall on the SS Helen Denny from the UK to arrive in Port Ahuriri, Napier on 22 October 1874.

Thomas’s three children, William, and his half siblings Elizabeth and John also made the journey. The two half brothers, William who is my great great grandfather and John Thomas originally bought a horse and coach business from the Crowther family.

However, in 1918 they established their own business known as Harvey Fulton and Hill, Public Accountants and Land Agents. This business originally covered Napier but later expanded to cover Hastings as well. My great great grandfather also a staunch supporter of the preservation of scenic spots in the province, and resolutely fought (though unsuccessfully), for the preservation of Balls Clearing, a bush in the Puketitiri district, and the area known as the Turangakumu Bush on the Napier-Taupo Road.

He was also a strong advocate for the East Coast Railway, and at the same time he was partly instrumental in the determined efforts made to have the Lake Waikaremoana Hydro Electric Power scheme developed. He was a member of the provincial committee that laid the foundation for the establishment of the Hawke’s Bay (HB) Electric Power Board. William, and his wife went on to have four children, of which the two boys, William Thomas (Bill) and Norman also went into the family business of Harvey Fulton and Hill continuing William’s legacy who died in 1945.

From 1932 Bill managed the Hastings office and became the General Manager of Harvey Fulton & Hill in 1965 when he bought his brother Norman out. Norman continued to run a real estate business in Napier until the early seventies, and then he moved to Auckland. So, the now Hastings based business of Harvey Fulton & Hill progressed.

My grandfather Bill Harvey was also a Registered Valuer. Interestingly, back in those days he was registered under the Valuers Act of 1948 when became a registered valuer for good behaviour and ability, no exams required – bit different to the current state of play! Bill was also the Hastings City Valuer and was very involved in the acquisition for the Council (Hastings City Council) of most of the land at Flaxmere.

Consequently, the Hastings City Council developed parts of Flaxmere to the extent of what we know today. My grandfather managed the business right up until his untimely death from cancer in 1971 and then my father, William Jens (Jim) took over the business. Under Jim’s tenure Harvey Fulton & Hill merged with Barry Long Real Estate, and for the first time since its inception Harvey Fulton & Hill had a name change becoming Harvey Fulton & Long being a Real Estate Agents, Valuers and Auctioneers, with the firm’s auction rooms situated in Russell Street in a location that we held from 1932 until the property was sold to become part the Bay Plaza development.

Dad, Jim Harvey was involved in Real Estate and Valuation and was President of the HB Real Estate Institute, Chair of HB branch of the Valuers’ Institute as well as receiving the Government appointment to become a member of the HB Land Valuation Tribunal, a position he held for about twenty-eight years. In 1997 the two branches of the family met up again when Harvey Fulton and Long became part of the Harvey’s Real Estate Group, which was founded by Norman’s son Ross Harvey, continuing the tradition providing both real estate and valuation services. However, in 2006 I bought back the valuation division within the HB franchise and set up Williams’ Harvey as an independent valuation practice. My career has been property focused but diverse giving me broad knowledge of the property industry in New Zealand (NZ).

Starting as a Property Manager at NZ Rail in 1990 I was promoted to be one of their youngest Area Managers until embarking on my OE in 1994. On returning I joined the family business selling residential/commercial real estate. After completing my valuation registration in 2001 I then became the General Manager for Harvey’s Real Estate, Hawke’s Bay and managed four business branches with over 50 staff through setting up Williams’ Harvey Registered Valuers.

In honour of my forebearers, who have all named their first-born sons William (known to their peers by their second name) and since William Harvey founded the first business four Williams’ have been valuing property or selling property in the region since 1918, hence the company’s current name Williams’ Harvey.

I am proud of the team, the business and the fact that I am the fourth generation Harvey involved in a business that started over 100 years ago.

Artificial Intelligence – user beware Privacy and security are crucial

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Artificial Intelligence (AI) has emerged as one of the most transformative and revolutionary technologies in recent history. From its humble beginnings to its widespread applications today, AI has garnered significant attention for its potential benefits as well as the inherent threats it poses.

Discussions and experiments in technology date back to 1946, when Alan Turing initiated the study of computer-based intelligence, and the term Artificial intelligence was coined as an academic discipline in 1956 by John McCarthy. Since then, AI has been central in many Sci-Fi TV shows and movies, but its potentially disruptive nature emerged with movies such as the 1984 War Games starring Matthew Broderick, 2004’s I Robot classic with Will Smith, and 2008’s Eagle Eye with Shia LaBeouf where it took on a threatening nature to human existence.

With the emergence of technologies like Alexa, Sari, ChatGPT, and other AI advancements, it is undeniable that science fiction has become a tangible reality. The impact of these
AI technologies has been profoundly beneficial across various sectors.

AI has increased efficiency and productivity in business, improved decision-making and problem-solving, making significant breakthroughs in healthcare and medical research, and automation and robotics. Despite its numerous advantages, AI also brings forth certain concerns that need to be addressed. Many are concerned that job displacements stand as a significant worry as automation and AI technologies potentially replace certain roles traditionally performed by humans. Focusing on reskilling and upskilling the workforce is crucial to adapt to the changing employment landscape.

Another major concern is the breach of personal data. As AI systems rely on vast amounts of data for training and operation, the privacy and security of this information become crucial.

For example, it isn’t common knowledge that ChatGPT knowingly records everything typed into it, and there is no clear warning that it is doing so.

This caused OpenAI to introduce in early April this year a “privacy feature”. This shift allows users to disable sharing their chat history in their user settings, but there isn’t a clear banner or other warning to point out this option (https://openai. com/blog/new-ways-to-manage-your-data-in-chatgpt). Safeguarding personal data from unauthorized access and misuse should be a top priority, ensuring that stringent measures and regulations are in place to protect individuals’ privacy. The history of AI is a testament to human ingenuity and our relentless pursuit of creating machines that can emulate intelligent behaviour. AI has the potential to revolutionise numerous industries, drive innovation, and improve our lives in countless ways.

However, it is essential to approach AI with caution, addressing the challenges it presents, such as job displacement, ethical concerns, privacy, and the potential risks of autonomous weapons. By navigating these challenges thoughtfully, we can harness the immense power of AI while ensuring its responsible and beneficial integration into society.

Tom is the owner of Govern Cybersecurity. He has over 18 years in the cybersecurity and IT industry at management level, and for the past 6 years has been a lecturer in cybersecurity at the Eastern Institute of Technology. He has earned certifications in ISO 27001 Lead Auditing, Lead Implementation, SOC2, and Ethical Hacking. These certifications are considered the international gold standard for business security.

150 years of insurance events in Hawke’s Bay

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As this July marks 150 years since the founding of Hastings, we thought it would be interesting to take a journey through some of significant events in the region during this time and see how insurance played a part in them. Has much changed since 1873 and what have we learnt?

Fire

Hastings first major fire occurred in Heretaunga Street in 1893 when two blocks of business premises were destroyed. Whilst it was reported at the time that many of the buildings had insurance, many were ‘shy of large insurances on stock’, according to the Daily Telegraph, and ‘in a few cases there is no insurance at all, and the sufferers are now bitterly repenting their inattention to this precaution.’

What is fascinating at this time is that the amount of insurance each company had was listed in the newspaper – not something that most business would be so keen to do now!

Floods

In 1897 the Ngaruroro River burst its banks and flooded a large part of the Heretaunga Plains with eight people losing their lives. As a result, houses in that area now have foundations that sit four or five feet above the ground. The total damage was estimated at £150,000, or $34,309,472 in today’s money.

A similar flood occurred in 1938 with hundreds of acres of farmland being coated in silt for up to four years afterwards, following three days of heavy rain. Similar to recent events, one of the hardest hit areas was Esk Valley.

Earthquake

The biggest disaster however was the earthquake on 3 February in 1931, which killed 256 people. Within a few minutes nearly the whole business district was destroyed, with fires breaking out only minutes afterwards. Only a few buildings in Central Napier survived. Back then, hardly any of the building owners had proper earthquake insurance. Those that did soon found out that the small print in their policy stated that fire caused by an earthquake was not included in their policy. Subsequent to this, the Government created the 1931 Hawke’s Bay Earthquake Act.

This provided statutory assistance for the Hawke’s Bay rebuild by allowing the ‘State Advances Superintendent’ to lend money to local authorities to repair damage caused by the quake. The Act was repealed in 2015 as it was no longer relevant.

Now of course those of us who have private insurance policies for our property and land automatically have earthquake cover under EQC. A thorough review of New Zealand building codes was also completed as a result of the quake, resulting in many buildings being built during that era being heavily reinforced. It is also why you will now only see four buildings in Hawke’s Bay taller than five storeys.

The earthquake risk has meant that it has been hard and expensive to secure cover for older buildings.

Cyclones

In more recent years we have been hit by severe weather events. Many will remember Cyclone Bola in March 1988 which struck Hawke’s Bay and the eastern cape of Gisborne.

Losses back then amounted to $90 million (equivalent to about $210 million today). Insurance payouts for the whole event totalled $37 million at the time excluding Earthquake Commission claims. Sadly, Cyclone Gabrielle has surpassed the losses of Bola with claims numbers as of 4th April 2023 totalling 14,707.

Claims made in Hawke’s Bay alone are worth $593m – more than half the total for the entire country at $1.155 billion. Unfortunately, both numbers are still climbing, and it will be sometime before we have final numbers and total losses accurately recorded. 6,819 claims out of 44,650 (15.3%) have been settled with pay-outs totalling just over $147 million out of an estimated
$1.155 billion (12.7%). Hawke’s Bay now accounts for 14,707 out of 44,650 Gabrielle claims (32.9%), but nearly $593 million out of an estimated $1.155 billion (51.3%) of claims by value.

What have we learnt?

Whilst 150 years is a long time it is interesting to see a couple of common themes across this period.

Back in 1893 even those who had policies were underinsured and, in 1931 following the earthquake, people with insurance discovered they weren’t covered under their policy when it came to a claim. These are two issues that are very common today and that can be avoided by regularly reviewing your insurance policies and using a broker who can help check the detail for you. Congratulations on your anniversary Hastings. ICIB Brokerweb is proud to be part of community and looks forward to serving you well into the future.

Medium density housing Hawke’s Bay

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Throughout the years central government have been gradually incorporating legislation into the planning framework that has directed local authorities to consider specific areas for housing developments and incorporating these into the rule frameworks of their district plans.

A key piece of legislative framework is the National Policy Statement on Urban Development (NPS-UD). The NPS-UD was released in December 2020 and formed part of the urban planning focus of the Urban Growth Agenda.

As part of the NPS-UD, Councils were directed to remove overly restrictive planning rules and plan for growth, both up and out, which in turn would enable greater height and density in appropriate areas of high demand and access.

With specific regard to the Hastings District, this has been given effect through the removal of the need to provide on-site carparking, the release of the Residential Intensification Guide in 2020, and the recent notification of proposed District Plan Change 5. Plan Change 5 will provide for medium to higher density residential developments, known as Comprehensive Residential Developments (CRD) in areas which are within or partially within a 400-600m radius of public transport, open spaces and commercial zones.

If a CRD meets the above criteria of Plan Change 5 and the applicable performance standards are met, then it triggers a Non-Notified resource consent. The key change here is the incorporation of the application being non-notified from the start means that consultation with the community is not required.

Although Plan Change 5 is not yet ‘operative’, this form of development has already been formally introduced to Council via the resource consent process. It may come as no real surprise that the incorporation of these developments has been met with some concern and pushback from local communities, evidenced by recent media coverage of proposed housing developments in Ada Street and Southland Road.

Similar opposition has also been voiced in Napier with recent medium density developments on the City’s commercial fringe attracting opposition from local residents.

The challenge to provide a housing solution results in tension between housing providers, developers, Council and community groups and this will be the testing ground for how Plan Change 5 will sit in the real world when it comes into effect. So, what is a solution here?

From what we understand, a key concern is the design of these developments, how they relate to the existing character of the area, and how well they fit into the resultant areas. These concerns all fall within the conceptual umbrella of urban design. Which is what many would refer to as a ‘grey area’ that is open to subjectivity, interpretation and opinion, that are not easily reflected in rules or easily quantified when exercising discretion in decision making.

Urban design is no recent concept, however, it is becoming more and more crucial to incorporate good urban design into these developments as we push for denser towns and cities, to provide for high quality living environments both for current and future generations. There are multiple qualities which fall within urban design, however as stated in the urban design protocol (2005), the key design qualities are limited to seven and include:

■ Context

■ Character

■ Choice

■ Connections

■ Creativity

■ Custodianship

■ Collaboration

It is noted that urban design is very subjective, and that different individuals will have different opinions about how a development fits within the above qualities. However, when it comes to proposed developments, this subjectiveness can be resolved, particularly when the development meets the CRD criteria of Plan Change 5, through consultation between developers and the Council.

The end outcome here is that there are clear understandings between both parties about how the development has incorporated good urban design qualities and the changes which have been made before an application for resource consent is even lodged with Council. What this consultation process looks like will need to be worked through between developers and Council.

Having Council put in place a defined process of urban design consultation with potential developers is a good start. The discrepancies between developers, Councils and community groups are creating a somewhat ugly phase in the process of providing denser towns and cities.

Our combined vision moving forward, needs to be that we provide these developments in a timely manner but that they also provide good quality environments and meet people’s needs. Through the inclusion of good urban design and appropriate consultation between parties where necessary, we believe this can be achieved and will also set a pathway for quality, higher density towns and cities in the future.

Matthew Morley BEP – Intermediate Planner
Matt graduated with a Bachelor’s degree in environmental planning specialising in Society, Politics, and the Environment. With an active interest in the outdoors and surfing, Matt is passionate about achieving good outcomes for both natural and urban environments and draws on his fundamental values to assist clients in achieving high value outcomes. Focused mainly on urban land use planning, Matt has a good understanding of project inputs, and through good communication skills, works well with project teams and Council Officers during both the application preparation and processing stages of a project.

Talk of town heralds redevelopment of Napier CBD

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The talk of the town locally is the recent Colliers sale of two iconic office buildings in the heart of central Napier, Dalton and Vautier Houses, heralding an era of extensive redevelopment in Napier CBD and presenting exciting leasing opportunities within the city.

The landmark properties, recognised as the largest office block in the Hawke’s Bay region, were acquired by Wallace Development Company, a move that promises to transform the cityscape and invigorate the commercial landscape.

Boasting a 100 per cent NBS rating, the buildings will feature flexible floorspaces that cater to a range of needs. Wallace Developments will be enclosing balconies to create more floor space, the total net lettable office space will increase from 7,269m² to 8,400m² providing ample room for businesses to thrive.

Other recent sales concluded by Colliers Hawke’s Bay include the vacant possession sale of Simply Squeezed Factory, coolstore and bottling plant situated in Bayview. Simply Squeezed owned by Frucor Suntory decided that the plant at Bay View would be closed and sold after operating for more than 30 years.

A significant industrial asset situated at 39 Edmundson Street, Onekawa, with a lease to Move Logistics has sold for the second time within two years, again reiterating the resilience of the Hawke’s Bay industrial market and lack of available land in Onekawa.

A brand-new NPD self- service fuel station on Heretaunga Street Hastings sold only one week after the doors opened at a yield of 5.82%, not far from where Colliers would have expected this to sell this asset at the peak of the market now 18-24 months ago.

This property had a brand new 15-year lease with annual 2% increases. The sale price shows there is still strong local demand for quality bottom drawn investments with solid tenant covenants.

Stabilisation in interest rate forecasts indicates turn in market activity ahead

The influence of interest rate rises on investor sentiment and sales activity within the commercial and industrial property sector is inescapable, but so too is the potential for growth given the forecasts of peak interest rate hikes this cycle.

Between April 2021 and March 2022, historically low interest rates, with the Official Cash Rate (OCR) ranging from 0.25% to 1.0%, combined with accommodative access to finance, resulted in heightened competition for assets, driving the total value of commercial and industrial property sales to $13.4 billion.

Over the subsequent 12 months, the OCR increased to 4.75% and remained on an upward trajectory. This saw investors adopting a more cautious approach, resulting in a significant slowing in activity, with the value of transactions falling to a provisional $5.8 billion*.

Transaction counts and annual sales values retreat from highs

When analysing sales by sector, industrial property was the strongest performer with 1,400 sales generating a total sales value of $2.84 billion, just under 50% of the commercial and industrial market’s annual figure.

Sales of retail properties comprised almost a quarter of the annual total by value at $1.3 billion. This was the highest share of total sales recorded by the sector since 2017. The total value of office sales at just under $893 million comprised 15.5% of the total, down from the sector’s 10-year average of 21.8%. This data highlights the ongoing confidence in the industrial sector’s demand, supply and income return drivers, greater focus on an office premises’ location and quality in a changed demand environment, and the retail sector’s longer term recalibration and transparency in performance metrics.

Trends mirrored across other asset classes

The reduction in commercial and industrial sales activity mirrors trends seen within the residential sector. Real Estate Institute of New Zealand (REINZ) data shows that in the 12 months to March 2022, the total value of residential sales nationally stood at $84.16 billion. By March 2023, the annual figure had retreated to $56.41 billion. Given the rise in the number of industry participants indicating a bottoming out in residential sales declines, this would also suggest that the end of declines in sales activity within the commercial and industrial sector is also imminent.

Outlook

Looking at the prospects for the remainder of 2023, it is likely that activity will increase from the levels witnessed in the first quarter. Over the last decade, first-quarter sales have comprised a smaller proportion of the annual total than the other quarters every year, with the exception of 2022.

Sales in the first three months of the year have generated an average of 16.5% of annual sales by value. As previously stated, the decline in sales activity has been driven by the rapid rise in interest rates. Investors have chosen to adopt a cautious approach given the uncertainty regarding the level at which interest rates would peak.

The stabilisation of interest rates and the expectation of future decreases are likely to underpin an increase in investor confidence and an upward trend in transactional activity.

*The lag in reporting of sales will result in total sales values being upwardly adjusted.

 

Protecting Your Assets – Why Legal Advice Matters for ‘Pre-Nup’ Agreements

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A recent decision in the Napier High Court, WL v AJ [2023] NZHC 703, is a timely reminder that seeking independent legal advice is crucial for a pre-nuptial agreement (pre- nup) to be valid and enforceable. The decision also demonstrates the consequences of not getting the right advice.

Understanding the Case

Let’s take a look at the case involving Mr W and Ms A.

They began their relationship in 2000, and on 3 July 2001, Mr W bought a home using his personal savings and registered it in his sole name. Mr W and Ms A moved into the home. However, due to issues in their relationship, Mr W wanted to protect his interest in the home. Mr W sought initial advice from a lawyer who explained that under the Property
(Relationships) Act 1976 (PRA), the home could be considered the “family home” since it was Mr W and Ms A’s main residence. If their relationship lasted for three years or more, Ms A could claim a half share of the equity in the home, despite the home being in Mr W’s name and Ms A not contributing financially to it. Mr W was told that the only way to prevent Ms A’s claim was to sign a pre-nup stating that the home was Mr W’s separate property. However, Mr W didn’t seek further legal advice or ask his lawyer to prepare a pre-nup. Instead, Mr W’s sister, who was studying as a legal secretary, drafted up a pre-nup.

Ms A briefly consulted the Community Law Centre over a phone call about the pre-nup. Eventually, both Mr W and Ms A signed the pre-nup with their family members as witnesses. In 2017, Mr W and Ms A separated. Mr W argued that the pre-nup was valid and enforceable, protecting the home as his separate property. On the other hand, Ms A claimed that the pre-nup was invalid and that she was entitled to a half share of all relationship property, including the home.

Outcome

Justice Mallon presided over the case. Justice Mallon pointed out that Ms A only received brief legal advice regarding the pre-nup over the phone. Justice Mallon believed that if Ms A had received detailed legal advice about the pre-nup’s effects and implications, she might not have signed it. Justice Mallon also noted that Mr W hadn’t received any legal advice on the pre-nup since it was prepared by his sister after he stopped consulting his lawyer. Moreover, the pre-nup was witnessed by family members instead of each party’s lawyer, as required by the PRA. Justice Mallon referred to a leading case on the necessity of independent legal advice and concluded that the advice received was insufficient, rendering the entire pre-nup invalid. Consequently, the PRA applied, and since Mr W and Ms A’s relationship had exceeded three years, Ms A was entitled to a half share of all relationship property, including the home.

Do You Need a Pre-Nup?

For a pre-nup to be valid, it must be in writing, signed by both parties and their lawyers, and each party must receive comprehensive legal advice. Without a properly executed pre-nup, your partner could disregard earlier understandings or verbal agreements about property and insist on their strict legal rights, just like in the WL v AJ case. This could leave you with much less property than you anticipated in the event of a separation. Even if you don’t separate from your partner, it’s essential to remember that the PRA can still apply upon your death. By having a pre-nup, you can specify how your property will be handled in the event of separation or death, providing certainty, and achieving your desired estate planning outcomes.

It’s not too late to get something drafted; you can execute one at any stage before separation. Protect your assets by reaching out
to Alex at Bramwell Bate Lawyers for assistance with pre-nup agreements or other relationship property issues.

Alex Fanning joined the team at Bramwell Bate this year and brings seven years’ experience in family law and relationship property. Following graduation from Otago University, Alex joined Oranga Tamariki in Dunedin. He relocated to the North Island and has spent time working at a mid-sized regional firm and a large national firm specialising in resolving complex relationship property disputes. Alex is an experienced litigator and can assist with resolution of a wide range of family law issues, whether by agreement or via an application to the Family Court. Email: alex@bramwellbate.co.nz Phone: 06 872 8210

Why is the business up for sale?

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Invariably, the first question I get asked by the potential buyer of a business is, “Why are the owners selling?” That question is driven by a natural concern that there might be something wrong with the business, “If it’s such a good business, why do they want to sell?”

I obtain a no-holds barred view of a business so I can evaluate its worth before presenting it to the market. For every business I’ve presented for sale, there are unexplored opportunities.
For the sellers, sometimes those opportunities are unexplored simply due to a lack of available time. I’ve not met anyone who has pulled the wool over my eyes and successfully offered a dud business as a pot of gold. I formulate
an in-depth sales document on every business I present; profit, warts, and all. Here are the top reasons why my clients have wanted to sell:

Retirement – the seller is close to or past retirement age. They want more time for themselves or time with
family and grand kids.

■ Simpler life – the seller is not retiring but has other priorities and something must give. Some sellers lose interest in staff management and business administration, yearning instead for simplicity.

■ Lost the oompf – the owner has lost passion for the business or industry, often developing a greater interest in a different industry or in an adjacent industry.

■ Realising the business’ value – some people are serial entrepreneurs. They love the set-up phase. They get a great idea and once the business
is past the start-up phase and is generating income, they are thinking about the next big idea and want to sell so they can generate value from the investment.

■ Relocation or Health – selling for health or logistical reasons is becoming more prevalent for ageing baby boomers. Some people just want to hit the road in their caravan. What about buyers? The main reasons I’ve encountered for purchasing a business are:

■ Competitor buy – a competitor in the same market wants to vertically integrate a business into an aligning sector.

■ Wages to business owner – you’ve probably heard of “The Great Resignation”, a trend towards self-determination. More and more people are deciding that if they are going to put in long hours, they may as well ensure that profits go in their own pocket.

■ Buying an income/investing – I’ve met several buyers, particularly in the last three years, who have relocated back to NZ and are seeking a higher return on their funds than traditional investments.

■ Repeat buyer – buyers who have previously owned and sold businesses and are coming back into the market and looking for new opportunities.