Edinburgh-headquartered global equities firm, Martin Currie, has rated NZ as an increasingly attractive prospect for investors in ‘real assets’.
Following a recent fact-finding mission to Auckland, Andrew Chambers, senior research analyst based in the Martin Currie Australia office, upped his ratings for NZ real assets.
“The spot yields for New Zealand real asset securities are attractive on a global and regional basis,” Chambers says in his analysis. “However, in my opinion, the market is underestimating the dividend-growth prospects that are backed up by the ongoing population and construction booms.”
He says his on-the-ground Auckland experience confirmed the value of the NZ assets Martin Currie already holds in its Real Income strategies while “presenting a range of potential new investment opportunities to be dissected by the team back home”.
The Martin Currie institutional real asset income strategies hold a number of NZ firms including Auckland Airport, Goodman Property Trust, Kiwi Property Group and the ASX-listed Scentre Group.
Chambers also visited two companies not in the Martin Currie portfolio – Fletcher Building and Precinct – to sound out how the NZ commercial property market and wider economy were tracking.
He cites a number of factors underpinning the feel-good NZ story including: a drive to “catch-up” with infrastructure building; strong demand for both commercial and residential land; high “migration and fertility rates:; and, an economic boost from the buoyant tourism sector.
A slight easing in the NZ dollar over last year was also seen as a net positive for the country, Chambers says, “as it has improved the competitiveness of various export industries and the tourism sector”.
The report lists a range of other upbeat points that have boosted NZ’s image as “an attractive place to live and work”, such as:
- decent wage growth leading to higher disposable income, especially for workers enjoying the construction boom;
- good government services like schools and healthcare
- the absence of Australian-style state bureaucracy or taxes; and,
- much lower personal tax rates than Australia.
“However, some concerns were raised around the challenges of migration-led strong house price growth, and talk from the new coalition government of a potential capital gains tax,” Chambers says.
Overall, he says NZ – if Auckland reflects the whole – is well-placed as an investment (and personal) destination.
“Walking around central Auckland, change is evident everywhere,” Chambers says. “Despite my trip being mid-week, the streets were bustling with construction, and the restaurants full. The city is transforming from a distant regional centre into a cosmopolitan city on the world stage.”
Martin Currie is an active global shares manager with offices in Edinburgh, London, New York, Singapore and Melbourne. The firm and affiliate of Legg Mason, which represents nine investment firms including Brandywine Global, Western Asset Management, Clarion Partners and RARE.