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Migrant inflow up as exit count adjusted down

Statistics NZ has created a highly confusing, and moving, picture of migration with its new formula, which became the official formula last month.

But the long & short of it is that emigration has risen sharply and immigration continues to decline.

Image above: The new series in figure 1 shows the final estimates from May 2015 to August 2017, and provisional estimates from September 2017 to December 2018, for the outcomes-based measure of migration. An experimental outcomes-based series is shown from December 2001 to June 2017 to give a longer time series.

The count for the year to December – a provisional estimate – is a net inflow of 48,300, ± 1,800, compared to 52,700(± 200) for the previous 12 months.

The ± symbol occurs a lot in these statistics, as initial figures are revised over the following months, to be finalised after 16 months.

That’s happened with the figures for the year to November, originally issued as a net inflow of 43,400 (± 1,500), now revised to an estimated 48,000 (± 1,200). Statistics NZ’s population insights senior manager, Brooke Theyers, said: “This is driven by changes in estimated migrant departures, from 100,600 (± 1,200) to 96,200 (± 1,000) for the year ended November 2018. Migrant arrivals remained relatively unchanged.”

For the December year, migrant arrivals were provisionally estimated at 145,800 (± 1,700) and migrant departures at 97,500 (± 1,400).

Mrs Theyers said that, compared with total border crossings, the number of migrants is very small: “Of every 50 people crossing our border, typically 49 are short-term movements and only 1 is a migrant arriving or departing.

“Of the 14 million border crossings in the December 2018 year, 81% are currently classified with certainty. The remaining 19% represent 2.6 million border crossings, so a small change can affect the migration estimates.

“The migration estimates become more certain after each subsequent month. In December, 1 in 4 arrivals are classified with certainty. This increases to 9 in 10 after 4 months. Therefore we expect the monthly revisions to become relatively small after about 5 months, as we can calculate the duration of stay/absence more definitively.”

Net inflow 270,000 over last 5 years

Mrs Theyers said the last 5 years – 2014-18 – had the largest net migration gains ever in New Zealand’s history, with an estimated 270,000 more migrant arrivals than migrant departures. An estimated 700,000 migrants arrived and 430,000 migrants departed over this period.

Most migrants arrived on work, visitor or student visas. However, by definition, they stayed for at least 12 months after extending their visa or transitioning to other visa types, including residence visas: “Even though many migrants arriving only stay for a year or 2, it’s important to count them as migrants and not short-term visitors. They are part of our resident population, which has implications for infrastructure & service provision.”

Using the new measure, annual net migration has gradually fallen from the record peak of 63,900 in the year ended July 2016, reflecting an increase in migrants leaving – in particular, non-NZ citizen departures.

Earlier story:
25 January 2019:
November net migrant inflow down 40%, annual rate down 19% as new measure kicks in

Attribution: Statistics NZ.

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Augusta Industrial Fund offer opens

Augusta Capital Ltd opened its unlisted industrial fund to new investment today as it seeks up to $115 million to add 5 properties to its portfolio.

That includes subscription for $10.5 million of shares by Augusta Capital itself, to ensure it maintains a shareholding of at least 10% in the fund.

The $115 million includes $10 million of oversubscriptions. Depending on takeup, new shares will comprise 58.3-60.5% of the fund’s total shares.

Gearing at this point will be in a range of 40-42%. Augusta said in the product disclosure statement it intended to continue growing the portfolio – though it had nothing further in sight for this year or 2020 – and intended to maintain a gearing target of 35-40%, which might increase to 45% short-term when new properties are acquired.

To ensure Augusta Industrial maintains its PIE (portfolio investment entity) status, no investor will be allowed to have a shareholding exceeding 19.99% of the post-issue total.

The share offer opened today and closes on Friday 22 March. Acquisition of the new properties (4 of them from other Augusta entities) will be settled and shares allocated on Thursday 28 March.

The whole portfolio of 9 properties has been valued at $296.7 million.

The portfolio’s 4 initial properties, 3 in Auckland, one in Wellington:

  • Penrose, 862-880 Great South Rd
  • Henderson, 12 Brick St
  • Mt Wellington, 20 Paisley Place
  • Wellington, Seaview, The Hub

New properties – 4 in Auckland, one in Christchurch:

  • Rosedale, 265 Albany Highway
  • Mt Wellington, 510 Mt Wellington Highway
  • Henderson, 116-152 Swanson Rd
  • Otahuhu, 5 & 21 Beach Rd
  • Christchurch, Hillsborough, Castle Rock Business Park, Mary Muller Drive

Augusta sees greenfield development opportunities at 3 of the new properties – Henderson, Mt Wellington & Rosedale.

Industrial fund chair Mark Petersen, who’s also an Augusta Capital director, says in the product disclosure statement that Augusta Industrial’s original $75 million share offer was oversubscribed. The initial portfolio’s value grew in a short time from a total purchase price of $114.1 million to $121.64 million.

Ongoing costs

The product disclosure statement highlights 2 areas of cost in managing the portfolio – management & property management fees, and interest.

Augusta Funds Management Ltd, the Augusta Capital subsidiary which runs all its portfolios, will charge a management fee of 0.5%/year of the total average value of the fund’s tangible assets, up to $500 million of assets under management, 0.4%/year above that figure.

The property management fee has been set at 1.5% of gross rental income, with 3 exceptions in the existing portfolio, on which the fees will be $50,000/year until 14 June 2021 unless it can recover more than that from tenants under their leases.

The manager will also be entitled to a performance fee equal to 10% of any shareholder returns above 10%/year, capped at 15%/year. Certain other transaction fees are also payable.

The other big cost factor is interest, forecast to be about 27% of the industrial fund’s net income for the next financial year: “Increases or decreases in interest rates will have a material effect on Augusta Industrial’s returns,” the offer document says.

“To manage this risk, Augusta Industrial has entered into interest rate swap agreements under which about 68% of Augusta Industrial’s drawn debt will be hedged on 28 March 2019, and this is expected to increase to 70% following settlement of the land sale at Great South Rd. This will reduce the exposure to floating interest rates.”

Listing potential

Augusta Capital chief executive Mark Francis has talked of the company’s intention of eventually listing the industrial fund, and following a similar track for other funds such as the tourism fund now being created, but hasn’t put a timeframe on listing.

In this product disclosure statement, the company states bluntly: “As part of this offer, Augusta Industrial does not intend to quote these shares on a market licensed in New Zealand and there is no other established market for trading them. This means that you may not be able to sell your shares.”

The offer document adds: “We do not think it is appropriate to consider a listing for Augusta Industrial at this point given current market conditions.”

Link: Augusta Industrial Fund

Attribution: Product disclosure statement.

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Updated: 8 commercial sales in Hastings & Napier

Published & updated 15 February 2019:
Bayleys agents have sold 6 properties in Hastings, including 3 in the central area, and another 2 in Napier (pictured above) & at Onekawa.

The information was revised this morning, with the sale of The Warehouse’s premises on Karamu Rd North in Hastings.

South of the Bombays

Hawke’s Bay

Hastings

326 Heretaunga St East, corner Hastings St North:
Features: 2725m² fitness centre, seismic assessment 96% of new building standard; national tenant City Fitness NZ Ltd is on 15-year lease with 2 6-year rights of renewal
Rent: $454,480/year net + gst
Outcome: sold to an Auckland syndicator for $6.5 million at a 6.99% yield
Agents: Mike Houlker, Sunil Bhana & Rollo Vavasour

322 Heretaunga St East:
Features: 950m² site in central retail location, 595m² modern standalone building; 8-year lease from February to national tenant Dollar King Ltd plus 24-year rights of renewal
Rent: $115,000/year net + gst
Outcome: sold for $1.625 million at a 7.08% yield
Agents: Rollo Vavasour, Mike Houlker & Sunil Bhana

1014 Heretaunga St West:
Features: 1880m² development site at Stortford Lodge, zoned commercial service allowing wide range of activities; various vacant buildings
Outcome: sold for $750,000 at $399/m²
Agents: Daniel Moffitt & Jake Smith

302 Jervois St:
Features: 2649m² site, 1690m² single-level industrial building
Outcome: sold for $600,000, new owner to undertake a comprehensive refurbishment of the building, including a new roof, before leasing
Agent: Rollo Vavasour

620 Karamu Rd North:
Features: 1.5389ha, 6400m² bulk retail building in the Park Mega Centre purpose-built for The Warehouse in 2012; 15-year lease until March 2027, annual CPI rental adjustments plus 5 3-year rights of renewal
Outcome: sold for $19.76 million at a 6.13% yield
Agents: Jim McKinlay & Mark Hourigan

303 Railway Rd:
Features: 1095m² fringe cbd site; NZ Police leases the rear of the site for secure parking, Hastings Taxis operates its communications centre from the front in a 100m² building
Rent: $37,157/year net + gst
Outcome: sold for $400,000 at a 9.29% yield
Agent: Jake Smith

Napier

100-106 Hastings St:
Features: 794m² cbd corner site, landmark 1038m² art deco building, seismic assessment 67% of new building standard; ASB Bank anchor tenant on 6-year lease from March 2017 plus 1 6-year right of renewal, Opossum World occupies balance of ground floor on 4-year lease from March 2017 plus 1 4-year right of renewal; 225m² first-floor office vacant
Rent: $183,850/year net + gst
Outcome: sold for $2.65 million at a 6.94% yield
Agent: Sam MacDonald

Onekawa

31 Cadbury Rd:
Features: 766m² leasehold site, 414m² workshop/warehouse, fully leased to 2 tenants
Rent: $40,800/year net + gst
Outcome: sold for $228,000 at a 17.9% yield
Agents: Jack Lee & Sam MacDonald

Attribution: Agency release.

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Eden Terrace apartment sells

An Eden Terrace apartment was sold at Bayleys’ auction on Wednesday, down $54,000 from the price paid in July 2015, according to Quotable Value Ltd records. I reported this unit’s sale at auction in May 2015 for $326,000, and its sale again in an August 2015 report at $449,000.

I haven’t confirmed the earlier sales records today.

Isthmus west

Eden Terrace

Der Rohe, 10 Flower St, unit 107:
Features: 55m², 2 bedrooms, balcony, secure parking space
Outgoings: rates $1360/year including gst
Outcome: sold for $395,000
Agents: Lucy Piatov & Chris Bell

Attribution: Auction, sales records.

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1 of 4 apartments sells in light bidding

Light bidding saw just one of the 4 apartments sold at Ray White City Apartments’ auction today, a unit in Siena Terrace in Grey Lynn (pictured).

CBD

Learning Quarter

The Quadrant, 10 Waterloo Quadrant, unit 1412:
Features: 32m², fully furnished studio
Outgoings: rates $1350/year including gst; body corp levy $4002/year including gst for the year ending 28 February
Income assessment: $400/week
Outcome: passed in at $301,000
Agent: Damian Piggin

Victoria Quarter

Altitude, 34 Kingston St, unit 3K:
Features: 27m², fully furnished 1 bedroom
Outgoings: rates $994/year including gst; body corp levy $3044/year including gst
Income assessment: $430/week
Outcome: passed in at $206,500
Agent: Dusan Valenta

Isthmus west

Grey Lynn

Siena Terrace, 6 Burgoyne St, unit 2F:
Features: over 50m², fully furnished 1 bedroom, tandem basement parking
Outgoings: rates $1321/year including gst; body corp levy $3852/year including gst
Outcome: sold for $475,000
Agent: Keisha Gutierrez

Mt Eden

Eden Green, 43 Edwin St, unit 424:
Features: 67m², 1 bedroom + flexi-room, 8m² balcony, storage unit, secure parking space
Outgoings: body corp levy about $4000/year including gst
Outcome: passed in after bid at $850,000, vendor bid at $880,000
Agent: Casey Chen

Attribution: Auction.

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US debt races to new heights

The US national debt whizzed through the $US22 trillion mark this week. It takes about 30 seconds to add another $US1 million to the total.

The US Treasury’s count is running about $US3 billion ahead of the US Debt Clock website’s, reaching $US22.01 trillion on Monday. The Debt Clock made the record $US22 trillion mark overnight and was up another $US9.8 billion this morning.

Treasury records show the national debt was $US19.95 trillion when Donald Trump became president on 20 January 2017.

The US Debt Clock website shows the US federal budget deficit is approaching $US870 billion.

The country’s gross domestic product is approaching $US20.9 trillion and its gross debt:gdp ratio is at 105.35%.

Links: US Treasury, debt to the penny
US Debt Clock

Attribution: US Treasury, Debt Clock.

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Updated: Units in 2 leaky buildings sell, off-plans vendor gets no bids

Published 13 February 2019, updated 14 February 2019:
An apartment in a downtown block where remediation is expected to start this year (City Gardens, pictured above) was sold at City Sales’ auction on Wednesday, but a unit in another block with remediation pending was passed in after 2 bids. It also sold, post-auction. In both buildings the remediation work is expected to cost about $30 million.

The owner of an off-the-plans unit in Conrad Properties Ltd’s Union & Co, at the top of central Auckland’s Victoria Quarter, couldn’t attract a bid as settlement looms a few weeks away.

CBD

Albert St

City Gardens, 76 Albert St, unit 13A:
Features: 59m², 2 bedrooms; cost to fix this unit put at $163,000, $99,000 paid by vendor, balance up to buyer; cost to remediate whole building estimated at $29 million including gst, work to start this year
Outgoings: rates $1149/year including gst; body corp levy $3843/year including gst
Outcome: sold for $282,000
Agents: Tony Kelly & Grant Elliott

Victoria Quarter

Updated: Imperial Gardens, 135 Hobson St, unit 801:
Features: 63m², 3 bedrooms, 2 bathrooms, deck, parking space; cost to fix this unit put at $200,000; unusually for a remediation, these owners are proceeding with the work first, estimated cost $34 million, suing later
Outgoings: rates $1304/year including gst; body corp levy $6187/year including gst
Outcome: passed in at $175,000, sold post-auction for an undisclosed price
Agent: Maryanne Wong

Union & Co, 15 Union St, unit 2:
Features: 30m² studio, courtyard level; construction scaffolding is coming down, settlement for off-plans buyers about a month away, no titles issued yet, and no rates or body corporate levies set
Income assessment: $320-340/week
Outcome: sole bid on behalf of the vendor at $300,000
Agent: Dahui Chen

Attribution: Auction.

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6 takeouts from Orr’s ‘nothing much to say’ analysis

Reserve Bank governor Adrian Orr, at today’s monetary policy announcement release.

Reserve Bank governor Adrian Orr’s unsurprising announcement today that the official cashrate would stay at 1.75% told me this:

  • The NZ economy is weak
  • Downturns elsewhere in the world could weaken it further
  • Costs might still increase
  • Businesses could speed the rise in inflation by passing on costs quickly
  • The Reserve Bank needs inflation to get up to 2% to show the bank’s performing properly, and
  • Government spending on hospitals, housing & transport infrastructure will prop up the internal economy.

Migration & banks’ role not discussed

Mr Orr gave migration a one-liner: “Net immigration continues to ease, slightly reducing aggregate demand.” And he didn’t mention one other powerful force: Commercial banks’ performance, which has the power to raise or lower housing expectations & business intentions.

He did say in the monetary policy statement, on housebuilding: “A range of capacity-related constraints mean that many construction firms cannot expand production enough to keep up with demand. Firms report that labour shortages, credit constraints & a lack of land with suitable infrastructure are limiting further growth in the sector. These constraints are expected to limit residential investment growth in the near term.”

He also mentioned in the policy statement there was a risk of economic slowdown, and therefore the chance the bank would cut its cashrate in support: “There is a risk that economic growth could slow down further over the next year if a global slowdown reduces demand for our products. Should that happen, we could lower interest rates to support employment and ensure inflation remains around 2%.”

Since its November statement, the Reserve Bank has lowered its projection for gdp growth in the medium term, based on a lower growth assumption for potential output. Some of this decline is attributed to the fall in residential investment.

Some of the projection figures:

  • The annual rate of gross domestic product (gdp) growth reached its lowest point in 5 years in the September 2018 quarter – 2.6% versus 2 sharp drops to 1.8% in the first & fourth quarters of 2013.
  • The Reserve Bank projects in its latest monetary policy statement that the gdp growth rate will rise to 3.1% through to the September quarter this year, then ease steadily through to the March 2022 quarter, all the way down to 2.1%.
  • The bank does see gdp growing steadily, in small steps. Assuming gdp (production) of $63.6 billion this quarter (in 2009 money terms), the bank projects growth of $5.1 billion through to the March 2022 quarter – an 8.1% rise over 3 years.
  • It expects New Zealand’s net foreign liabilities to hold at around 53-54% of gdp over the next 3 years. And it expects the labour force participation rate, which was at 65.1% (seasonally adjusted) in 2000 and reached 70% in the September 2016 quarter, to have topped out at 71% in the September quarter just gone and to sit at 70.9% for the rest of its projection period. It expects average hourly earnings to have risen by 2.8% in the December quarter, to rise 3.8% in this quarter, and rises then to sit mostly in the low 3%/year range.
  • The bank & CoreLogic project that CoreLogic’s house price index will continue its decline from a peak increase of 15.1%/year in the December 2016 quarter to a rate around 2%. Since that peak, the index rises were 12.8%/year in the March 2017 quarter, dropping to 6.4%/year in the following quarter, to a projected 3.2% in the December 2018 quarter and to 2.6% this quarter. Looking forward, they see 3 bigger rises in the next 3 quarters this year (4.3%, 4.7% then 4%), then index rises mostly around 1.9-2.1%/year through to 2022.

The release statement:

Apart from the possibility of a cashrate cut to combat a decline in international trade, Mr Orr said he expected the rate to stay at 1.75% through this year & next.

In his media release he commented: “Employment is near its maximum sustainable level. However, core consumer price inflation remains below our 2% target midpoint, necessitating continued supportive monetary policy.

“Trading-partner growth is expected to further moderate in 2019 and global commodity prices have already softened, reducing the tailwind that New Zealand economic activity has benefited from. The risk of a sharper downturn in trading-partner growth has also heightened over recent months.

“Despite the weaker global impetus, we expect low interest rates & government spending to support a pick-up in New Zealand’s gdp growth over 2019. Low interest rates, and continued employment growth, should support household spending & business investment. Government spending on infrastructure & housing also supports domestic demand.

“As capacity pressures build, consumer price inflation is expected to rise to around the midpoint of our target range at 2%.

“There are upside & downside risks to this outlook. A more pronounced global downturn could weigh on domestic demand, but inflation could rise faster if firms pass on cost increases to prices to a greater extent. 

“We will keep the official cashrate at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low & stable inflation.”

Link: Monetary policy statement

Attribution: Bank release, monetary policy statement.

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Residential value changes look localised

Value change in residential markets looked localised in Quotable Value Ltd’s latest index, out today.

Auckland values look close to a standstill overall, but with those local variations – turning upward in the last 3 months in the country’s most expensive neighbourhood, the eastern suburbs on Auckland’s isthmus; still negative on the North Shore; still perking up in Rodney & the Hibiscus Coast; slightly weaker in the west; a mix in southern suburbs.

Senior QV consultant Paul McCorry said affordability constraints & low supply continued to keep value growth modest in most areas.

While loosening the loan:value ratio (LVR) restrictions would enable some buyers to enter the market, confirmed & anticipated policy changes dampened investor enthusiasm in the short term. He expected investors to hold back until key policy changes such as capital gains tax are debated.

QV expected the foreign buyer ban to have greatest impact in premium areas like Queenstown, but it had solid quarterly growth of 3%. However, Mr McCorry said Auckland may have been affected, with values flat.

As has been the case since values started to turn downward in Auckland 2 years ago, other parts of the country have experienced comparatively large value gains.

Kaipara has been relatively strong, with value gains of 2.5% over the last quarter & 9.9% over a year, but the big surge has been in Hawke’s Bay – 10.8% in Hastings in the last 3 months, 11.2% over 12 months there & 11.3% in Napier.

The QV view of the next few months: “The underlying drivers for the New Zealand economy remain positive. We have a strong labour market, there are still plenty of new people coming to live in New Zealand and interest rates remain close to historic lows. With the Reserve Bank anticipated to keep the OCR at 1.75% for the foreseeable future, we’re seeing banks offering very favourable lending rates provided buyers meet the set criteria. We’re expecting 2019 to be a year where value growth is not at the levels of the last few years but, equally, any value decreases are likely to be modest as demand still outstrips supply.”

Below, the dollar figure is the average value for January. The first percentage gain or fall is for the 3 months to January, the second is for the last 12 months (QV switches those around in its tables) and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries (councils marked in bold); Kaipara & the Hauraki Gulf Islands, as usual, have low counts:

Total NZ: $684,468, 0.9%, 2.9%, 65.5%
Auckland region: $1,045,775, -0.1%, -0.9%, 92.0%
Rodney: $960,040, 2.1%, 1.3%, 63.7%
North: $987,135, 2.5%, 1.9%, 64.3%
Hibiscus Coast: $933,000, 1.5%, 0.5%, 58.8%
North Shore: $1,202,443, -1.1%, -2.2%, 86.3%
Coastal: $1,362,966, -1.9%, -3.4%, 80.9%
Onewa: $968,251, -0.9%, -0.9%, 95.2%
North Harbour: $1,191,045, 0.7%, -0.7%, 96.0%
Waitakere: $819,303, -1.1%, -0.4%, 93.2%
Auckland City: $1,234,033, 0.2%, -0.9%, 98.2%
Central: $1,082,344, 0.3%, 0.4%, 90.0%
East: $1,557,718, 0.5%, -1.2%, 95.5%
South: $1,092,400, -0.2%, -1.1%, 102.9%
Islands: $1,166,754, 2.5%, 0.0%, 82.5%
Manukau: $903,213, 0.1%, -0.1%, 97.3%
East: $1,147,319, -0.8%, -1.2%, 92.5%
Central: $705,752, 0.4%, 0.4%, 87.7%
North-west: $785,644, 1.1%, 1.2%, 112.6%
Papakura:  $696,144,-0.7%, -0.6%, 93.5%
Franklin: $670,613, 0.0%, -0.4%, 69.5%

On the borders & down country:
Whangarei: $561,271, 1.5%, 10.1%, 41.6%
Kaipara: $557,155, 2.4%, 9.9%, 40.4%
Waikato: $489,613, 0.6%, 4.1%, 61.7%
Hamilton: $577,352, 0.3%, 5.9%, 59.7%
Tauranga: $721,981, 2.0%, 3.3%, 50.0%
Gisborne: $323,676, 0.6%, 9.2%, 8.9%
Hastings: $504,553, 10.8%, 11.2%, 61.9%
Napier: $538,635, 4.3%, 11.3%, 58.3%
Wellington region: $693,448, 1.1%, 7.9%, 52.2%
Christchurch: $497,370, 0.8%, 0.6%, 31.1%
Queenstown-Lakes: $1,201,645, 3.0%, 7.6%, 74.7%
Dunedin: $436,208, 2.9%, 11.1%, 52.4%
Invercargill: $286,253, 2.0%, 12.2%, 29.8%

Link: Full QV index tables

Attribution: QV tables & release.

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World property: Introduction; inclusive capitalism; room sharing; affordable Australia; blanket view; Brexit waves; Russia expands

An introduction to a different look at world property, politics, economics & finance

Introduction
Fund manager writes about inclusive capitalism
Will room sharing become more common?
Research on delivering affordable housing
Hotspotter on how many in media get Australian residential wrong
What’s Brexit got to do with us? The waves are spreading
Russia expands influence in all directions

Introduction

This introduction to World property on Wednesdays is about a revised version of my coverage of world property (which had lapsed), economics (highly important to gauge our place in a rapidly changing international scene), politics & finance (where the money’s moving).

2 of today’s items are about events in faraway places with potential consequences for New Zealand. Both happen to be from Asia Times columns, but you can expect a wider spread of sources.

You can read thousands of lines every day about US President Donald Trump, but I’ve found very few of those articles read between the lines.

You can also read thousands of lines every day about what China is doing, what the US wants to do to it. After the shouting, I want you to be able to read, here, what seems to be happening that will bring change internationally, and potentially to New Zealand.

Aside from those major economic earthquake lines, large players in property are creating new plays and entering new markets. Their actions may give you ideas on economic activity, financial positioning & investment directions that aren’t just “over there” but also frequently relate to “down here”.

My previous World property items didn’t attract the audience I thought they deserved, perhaps from presentation rather than content.

The new version will contain a wider mix of items, plus links to stories that I think pierce the fog and will help you understand changes in influence likely to impact on New Zealand in some way.

In property, I think it’s worth understanding some of the new kinds of transaction being carried out in various parts of the world – for example, residential portfolios in Europe, reits (real estate investment trusts) of different sizes frequently offering opportunity in one country to investors in another, the investment moves of Singaporean, Chinese, US & European entities in other economies, the Chinese role in Australian development.

At the moment, the Trump challenges to world order as it was are bringing realignment going far beyond his narrow trade aspiration (‘Play fair, all you other people!’) & aspiration for the US to retain global control. It’s important, from the New Zealand perspective, to see relationship challenges such as 5 Eyes versus Huawei – very hard to sit on both sides of the fence.

Health warning:

These items are in a form that you can flick through quickly. But they also have numerous links to sources, including original research, so you can spend time digesting the content.

In today’s first batch of items:

Fund manager writes about inclusive capitalism

Nigel Wilson, who heads giant international funds manager Legal & General Group Plc, wrote in Forbes magazine last July: “Never has there been so much global capital. Never has money been so cheap and yet so poorly used. Some $US8 trillion is earning 0% or less, alongside massive infrastructure underspend & no growth in real wages: a poor societal outcome.

“Since the global financial crisis, our capitalist system has created extraordinary, but exclusive, wealth & its flip side: cynicism & resentment.  The ‘financialisation’ of business has driven underinvestment, widening the disconnect between Wall St & Main St and giving impetus to the dismal economic doctrine of ‘secular stagnation’…

“This article is going to take a close look at the idea of inclusive capitalism – what it is, how it can be defined, some positive signs of its emergence and will provide actual examples of it, hard at work.”

Dr Wilson is group chief executive of Legal & General, which manages $US1.4 trillion of investments. In 2015-16 he was a member of then-UK prime minister David Cameron’s business advisory group, about which he wrote: “The experience helped inform my thinking on how capitalism can broadly benefit society. The approach advocates for using capital to engender conditions in which people can create their own success. This is essential if we are to create a fairer society that empowers people and enables all boats to rise.”

In a separate piece on the company’s blog in November, Legal & General advanced Dr Wilson’s July argument in Forbes, looking inside the tertiary education system and finding a flaw to be fixed: “Innovation & new businesses go hand in hand, so why do universities in the UK & US struggle to build on students’ ideas? By installing an inclusive capitalism mindset we can boost the economy, nurture talent & build communities.

Links:
Nigel Wilson in Forbes, 29 July 2018, Inclusive capitalism: Oxymoron or the perfect balance?
Legal & General blog, 29 November 2018: University challenging: how inclusive capitalism breeds innovation
30 April 2018: Legal & General launches affordable housing arm (GB)
Legal & General

Will room sharing become more common?

2 Sydney academics, Zahra Nasreen & Kristian Ruming, wrote in a guest post in Property Observer in January: “The proportion of households experiencing rental stress is on the rise across Australia’s major cities. High rental prices have been driving an increase in shared housing. The most extreme form of this is ‘shared room’ housing – where residents share a bedroom or partitioned living space (such as lounge room or garage) with a number of unrelated adults.”

Their full research paper can be reached via Taylor & Francis Online. Taylor & Francis is an academic & professional publisher, and a subsidiary of Informa UK Ltd. The group parent, Informa plc, is a business intelligence, academic publishing, knowledge & events group.

Links:
Property Observer
Property Observer, 18 January 2019: Tracking the rise of room sharing & overcrowding, and what it means for housing in Australia
T&FOnline, 24 December 2018: Room sharing in Sydney: A complex mix of affordability, overcrowding & profit maximisation
Taylor & Francis
Informa

Research on delivering affordable housing

3 other Australian researchers focused on Melbourne in their paper, also available in T&FOnline, on whether the marketplace as it is can deliver quality affordable housing. The paper is by Melbourne University academics Andrew Martel, Carolyn Whitzman & Alexander Sheko.

They wrote in their abstract: “Australian government housing policy relies on the private housing industry contributing to the supply of affordable & social housing in cities. However, the diminishing availability of suitable housing for many households raises the question of whether the private housing industry is interested in, or capable of, catering for this market segment. Engagement would require both inducements & regulation, partnerships with government & non-profit actors, and an alignment of attitudes regarding the need & responsibility for providing dwellings in housing submarkets. This paper explores perceptions & strategies of actors regarding the role for the industry in the context of Melbourne.”

Link:
T&FOnline, 24 January 2019: Private developers & the public good: Can a socially constructed market deliver quality affordable housing for Australian cities

Hotspotter on how many in media get Australian residential wrong

Terry Ryder, founder of hotspotting.com.auand an astute observer, wrote a column 18 months ago about Australian property markets that’s just as relevant today: “Much of what appears in mainstream media about residential real estate discusses Australia as a single market. That’s an early clue for consumers that the commentator has shallow knowledge.”

Links:
Property Observer, 24 July 2017: As Sydney fades, Perth shows early signs of recovery: Hotspotting’s Terry Ryder
Hotspotting

What’s Brexit got to do with us? The waves are spreading

UK researcher Hannah Timmis wrote in Asia Times on Monday: “As the UK heads towards a possible ‘no deal’ Brexit, the uncertainty surrounding the terms of the UK’s imminent departure from the European Union is making waves as far away as South-east Asia.”

Ms Timmis wrote in her work blog at the Centre for Global Development: “New research shows trade-reliant poor Asian nations will be especially hard hit if the UK & EU can’t come to terms on their separation.

“A no-deal Brexit would deprive some developing countries of tariff-free access to the UK market. Under the worst-case scenario, developing countries could suffer a $1.6 billion or 5% decline in their UK exports, with least developed countries among the worst affected. To minimise the damage, the UK government must prioritise legislation that would maintain preferential market access for developing countries.”

Ms Timmis is a research assistant at the Centre for Global Development, supporting Mikaela Gavas’ work on development finance & European development policy. Her previous work includes being a project manager in the Middle East & North Africa, overseeing the delivery of aid programmes. She holds an MSc in development management from the London School of Economics and a BA in philosophy, politics & economics from Oxford University.

Links:
Asia Times, 11 February 2019: No-deal Brexit could sink much of Asia
Centre for Global Development, 25 January 2019: Why a no-deal Brexit would be bad for developing countries
German Development Institute briefing paper, February 2019: How Brexit affects least developed countries

Russia expands influence in all directions

In the second Asia Times piece, Alexander Kruglov examines Russia’s changing world roles under President Vladimir Putin: “Russia is going head-to-head with the West as it pursues Eurasian integration and expands its footprint globally.”

Link:
Asia Times, 11 February 2019: Gas, guns and pragmatism: Putin’s foreign policy

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