New Zealand: Life, business and property under Covid-19

In one of two articles involving Thames Tap contacts abroad, Hugh Blaza finds out how Kiwis coped with the pandemic.

In tackling Covid-19 in New Zealand, the message was clear and unambiguous from the start.

Ex-commercial property lawyer and now business therapist, Irena Trnka De Benedictis, was visiting the country when the virus hit and effectively remains in lockdown.

Kiwi Prime Minister Jacinda Ardern made it easy. There would be four levels for dealing with the virus: total lockdown at Level Four to freedom of Level One.

The country achieved the transition in 101 days. Ms Ardern was helped in her single focus on eradicating the virus by the high quality response of what she called ‘the team of five million’.

In mid-March, Ms Ardern’s message was: Going Hard and Going Early. Kiwis were told: Every day counts! Stay at home, stay alive!

And that approach, strictly observed by the vast majority of the population, enabled Ardern to announce the defeat of the virus – for now.

But in spite of their recognition of the near certainty that it will return at some point, Kiwis are, for now, celebrating the return of their freedoms to gather, drink, watch and play contact sports, hold weddings and hug strangers.

So how cautious has the return to work been there? Is everyone embracing the end of working from home and relishing their return to offices, shops, factories and bars? The simple answer appears to be ‘yes’. There seems to be consensus that the virus has been driven out and it is not a daily threat. The general public are carrying on without fear.

Bars, restaurants and shops are full. Office staff are embracing a new hybrid model. The buzzwords are: flexible working, remote attendance, digital nomads. Working from home several days a week and going into the office only to meet the team and attend meetings is the preferred option. The future has arrived with a thump.

And what of the property market? Trnka says it appears to be alive and kicking. The residential property market is, she says, picking up with viewings of coastal properties and homes with a large acreage, evidencing renewed demand after months of frustration in lockdown.

Demand by overseas investors, who after recent legislation are able to acquire only newly-built apartments and condominia, has intensified. Covid-19 has confirmed New Zealand’s status as a safe bolt hole. But despite the initial euphoria in overcoming Covid – 19, the national mood appears to have shifted: after Covid comes the hard grind.

But according to Ian Little, associate director of research at Colliers International, commercial property investors will also see plenty of opportunities in months ahead (April 2020 Colliers Investor and Occupier Sentiments Survey).

Creating some potential imbalance is that vendors are choosing to delay divestment until the second half of 2021, whilst purchasers are showing enthusiasm in the belief that values could ease over the short term from the peaks apparent over the latter part of 2019. Apparently 80 per cent of the survey respondents are picking a decline in values, but some may be disappointed as recent transactional evidence suggests that high-quality properties with premier tenant covenants remain in demand with limited shifts in pricing.

Significant rental relief was common during lockdown and likely to continue. Level 1 could allow greater proportion of tenants to capture higher cashflows, enabling resumption of full rental contract payments in the future. June 4 saw the announcement of a new Government-subsidised arbitration service determining fair and reasonable rental.

Now that survival is no longer dominating national consciousness, there is increasing recognition that it is hard to develop a vision whilst fighting off a crisis. A groundswell of opinion appears to be telling the Government to move out of the way and let business ‘do its thing’.

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