Best cities to buy rental properties in New Zealand

Whenever we come across a new client in person or over the phone, the first things we share is:

– We only deal with brand new property investments
– We only recommend investment properties in Auckland, Hamilton and Cambridge

We do not deny that there are opportunities in other parts of the country, but we chose not to capture them for certain reasons.

When we select the property investments to recommend to our clients they must meet the following location related criteria:

  1. Dynamic growth locations with historic growth and the right evidence to support the future growth.
  2. Strong rental demand
  3. Amenities and facilities nearby
  4. The rental property must be affordable to keep

We and our clients love capital gains, we are not in it for a cashflow of $50 a week only. We want the property values to double over the next 7-10 years.
The cities, that we specialise in, have proven for the last 60 years that it is the case. It wouldn’t be prudent to assume that just because of the past performance the property will continue appreciating. In order to see the opportunities for growth we must look at what’s happening in those locations at present. All 3 of them have one great thing in common-they face a severe shortage of rental properties. The shortage is what drives the rents and the prices. Hence if you are a property investor, you will benefit from it. Hamilton has a tiny vacancy rate of 0.5% PA which means that the property is vacant for less than 2 days of a year. Not bad, is it?

What determines which city we shall recommend in the property strategy meeting? The answer is simple; it is the budget. For example, if your borrowing capacity is $700k + AND you can also afford a personal top up between $20 and $50 per week then Auckland will be a great option for you. If your budget is $500k to $650k then we will look at Hamilton. Cambridge is sitting between $640k and $700k. Home and income type of investment in Hamilton and Cambridge will set you back by around $900k-$1m while in Auckland you must be prepared to fork out $1.2m.

Hamilton is a jewel location for property investment. I’d like to keep this article short-ish so I shall outline the biggest opportunities or reasons why you should invest into Hamilton:

  1. NZ’s largest inland city, and 4th largest urban area. Hamilton urban area was estimated to have around 212,000 inhabitants in 2013.
  2. Key business charters include: ag biotech, light aviation, transport logistics, light engineering, science, research and education.
  3. More than 40,000 tertiary students choose Hamilton’s learning institutions every year.
  4. Shopping, hospitality, cultural hubs.
  5. Health – The Waikato District Health Board, provider of hospital and health services, Health Waikato, is one of NZ’s largest in terms of revenue and the types and numbers of services provided. The Waikato District Health Board provides services for a population of 337,000people, covers 21,220 sq km and has a budget of $70m.
  6. Economy – Hamilton is the major commercial and industrial centre of one of the richest agricultural and pastoral areas in the world. Waikato accounts for almost 20% of the country’s total exports. The surrounding dairy industry strengthen Hamilton’s economy and its wide business base of over 11,000 businesses.
  7. There has been a 44.8% increase in the number of businesses over the period 2001 to 2007 up from 8,970 to 12,987.
  8. Close distance to other big vibrant cities such as Cambridge, Tauranga and Auckland.
  9. The largest inland port is currently being built in the east of Hamilton. It will attract 12,000 new jobs and only a quarter of them will be sourced locally.

Now let’s see what makes Cambridge a “Town of Champions”?

1. Quality education – Cambridge is spoilt for choice regarding great schools, with 14 schools to choose from, ranging from small rural schools right through to Cambridge High School and St Peters School with more than 1,000 students on their roll. Pre-school youngsters are also well catered for with more than 20 early learning facilities available.
2. High performance sport – Known as a “town of champions” it is no wonder that Cambridge has a world-class presence as a centre for equine, BMX and rowing (Lake Karapiro), with the recent addition of the Avantidrome track cycling facility. Elite sport is adding to the demand for rental accommodation for the athletes, coaches and support people.
3. Population Growth – Cambridge has more than 19,600 residents and is at the heart of the Waikato, the country’s fifth fastest growing province. The town is part of Waipa District which has about 46,600 residents. The Waipa District Council forecasts the district’s population will grow by 12% in the decade to 2022, and to 70,000 by the year 2050. Cambridge’s population has increased significantly as its role as a rural services town has developed, and as improved roads have enabled people to live here and commute to jobs in nearby Hamilton and Tauranga. An estimated 20% of Cambridge residents work in Hamilton.
4. Proximity to Hamilton – Cambridge and surrounding areas are quickly becoming the desirable suburb of Hamilton. With a new Waikato Expressway opened, Cambridge is only 10 minutes away from the city’s edge. Being close to Hamilton major employers such as Waikato Hospital, Gallagher Group, Waikato University and Hamilton City Council ensures good long-term tenant demand.
5. Thriving local economy – While many regional towns are struggling, Cambridge is enjoying a small business boom, with a bustling main street, wide range of shopping options including boutique clothing and homewares, weekly farmer’s market, “Alfresco Bites” event and more than 20 cafes. A thriving local economy gives people options to live and work in Cambridge, further increasing housing demand.

I am going to wrap it up here and skip Auckland as most of you are well aware of how abundant this “land of opportunities” is.

If you have any questions about these cities or properties, we recommend don’t hesitate to contact us.

To learn more about Property Investment, click here.

By |2020-07-15T04:04:20+00:00September 13th, 2018|Blog|0 Comments