Taupo - Steady as she goes

Taupo is a region renowned for its fresh water lake the size of Singapore, its rivers, trout fishing, golf, snow, clean air, and outdoor adventures. Located in the central North Island amid a dramatic volcanic landscape, Taupo has always attracted large numbers of domestic and international visitors. But it’s an area where internal activity is also thriving.

Taupo has experienced unprecedented levels of internal growth over the last two to three years, says Taupo District Council planning manager, Gareth Green. “While there’s been some in-fill growth and lakeshore settlement, it’s the greenfield – or rural – sites where growth has been the most significant. This is where the trend is. The 220-lot Wharewaka subdivision on the outskirts of Taupo towards the airport is an example of this greenfield growth.” 

Responding to concern from the community that the level of greenfield development would become ad hoc and have no strategic planning, Taupo District Council drew up a growth management strategy outlining where future growth would occur and the scale of such growth. The final strategy of Taupo 2050 was adopted this year. Green says the council has been very pro-active in its planning.

Targeted areas include Kinloch in the western bays, which traditionally has experienced a lot of growth. “There is a structure plan in place outlining growth patterns for approximately 1900 lots,” says Green. “Tapuaeharuru Bay, between Acacia Bay and the airport, has been identified as being appropriate for residential development, while minor growth is planned for the southern lake shores and Turangi. 

One of the projected hot spots is a new growth node in the Mapara valley. A resource consent application is currently before council for a 1,331-lot major residential subdivision and commercial centre of 231 hectares at Mapara, west of Taupo. If approved, the subdivision will involve the development of five existing neighbourhood blocks, which the developer intends to further subdivide.

Each of the neighbourhood blocks would have between 46 to 185 residential allotments and units ranging in size from 800m² to 2500m2. The residential units will be within hillside terraced housing where each unit has a floor area of 300m². The area set aside for commercial development is a site currently zoned rural in both the proposed and transitional district plans. The applications include land set aside for roading and infrastructure needed to support the residential development.

Green says that Mapara’s proposed residential development together with a large secondary shopping centre in Acacia Bay will effectively create a new neighbourhood west of Taupo township. 

Taupo is also expecting significant community growth, including the construction of an amphitheatre at the Tongariro Domain for concerts and shows, and a large motorsport track which will host the international A1GP car race in January 2007, expected to draw crowds of 40,000, and have millions of international viewers.

A development which will impact hugely on the town is the creation of an eastern arterial route between the airport and Wairakei. A collaborative project between Taupo District Council and Transit New Zealand, the bypass will divert heavy vehicles and create calmer traffic within the town. The four-stage project is expected to get underway in the next financial year. 

Warren Kettlewell, president of the Taupo Chamber of Commerce, says the East Taupo Arterial will have a significant positive impact on Taupo, as will the motorsport track.
 
Tourism is a major economic driver, with visitors drawn to Taupo’s many attractions, including the lake and mountains. Events in the area, such as the Ironman and the Lake Taupo Cycle Challenge have become increasingly bigger drawcards.

Farming and forestry also have a significant influence on the Taupo region, as do other key industries like power generation.

“Key industries, with the possible exception of forestry and its associated sectors, are stated to be doing very well, but the shortage of skilled labour and difficulties associated with attracting people could, or will, eventually impact on businesses’ growth opportunities,” Kettlewell says.

“The high rates of tax, including local authority rates, continue to be issues not only for Taupo but across New Zealand. High fuel costs are impacting on everyone, especially transport operators.”

Kettlewell says the region’s unemployment levels are at an all-time low. “Numbers are stated to be approximately 60 individuals in the Taupo area with 50% of these aged 60 or older. This is making recruitment very difficult.

“Property values in the area are also very high and this, coupled with living and rental costs, is not inducing those in the 30-plus age group to come to Taupo. This is adding to the ever-increasing difficulty in local businesses recruiting people with the necessary skills.

“On-going residential developments are evident, however, the underlying issue of getting skilled people to town could well see a slowdown in this area.”

Harveys rental manager, Maree Beadle, who has been in Taupo’s rental property market for 10 years, says the market has escalated over the past six months. Rather than slowing down, Beadle says a significant influx of people have moved to Taupo since March, creating a demand for long-term accommodation and fixed term contracts. “Six months ago, rental on an average three-bedroom home was $275-$280 per week. These houses are now returning $300-plus. We were letting around 11 properties a month; now it’s currently between 15-18.” 

“There is a strong demand for four-bedroom houses, but there are few available. Demand for two-bedroom properties is fairly stable, and depending on their quality and location, weekly returns are between $200-$240.

“We do have properties in the $400-$450 per week range, but they not the type single income families will look at. These families want houses in the $300-$350 bracket.”  

Beadle believes rents in Taupo may be higher than in other centres such as Tauranga. “When investors walk in the door I give them certain areas to look at. A home in Richmond Heights, for instance, selling at between $290,000-$330,000 is likely to return between $300-$340 per week. A similar property in another area might sell for $550,000-$600,000 and still only give a similar weekly return as a house in Richmond Heights.”

Aside from long-term rentals, Beadle says holiday rentals in Taupo are an increasing sector of the rental market. “It’s busy all year round. November, December and January are always fully booked, but winter bookings have increased substantially. Furnished holiday properties are usually rented on a per-night rate. A longer period of 4-12 weeks might see a return of $350-$600 per week, plus power.”

Figures supplied by the Real Estate Institute of New Zealand show that the median house price in Taupo moved from $282,667 in May/June/July 2005 to $320,000 for the same period in 2006, showing a rise of 13.2%. The average house sale rose 10.6%, with prices moving from $348,998 in May/June/July 2005 to $386,120 for the comparative period in 2006. 

Tony Hay, managing director of Taupo Realty Services Limited Harveys Taupo, says growth and future growth is predominantly to the west (Acacia Bay and beyond), although over the past three years there have been large subdivisions sold off in Wharewaka Point (south), Botanical Gardens (eastern central), and Kinloch, 20 minutes to the west, beyond Acacia Bay.

“Demand is from across the board, including locals upgrading, investment, holiday homes and a significant number of ex-pats buying investments for their future return to New Zealand.”

“There have been several major subdivisions released in Taupo over the past three
years involving hundreds of sections. In all cases interest has been strong, with most
completely sold prior to titles being available. With more subdivisions coming on-
stream, interest remains strong from investors, builders, homeowners and holiday
homeowners. Prices have been $200,000 to $350,000 for an average section with
several premium lakefront sections selling for over $1,000,000.” 

Hay says apartment developments are relatively new to Taupo. The first high quality lakefront apartment complex was completed in 2003. The best of these sold in the $900,000s and resales since have been $1,200,000 and $1,250,000. “One of these premium apartments is currently for sale for $1,275,000, which we believe represents exceptional value, as more recent developments of similar size have been selling from $1,600,000 to $2,200,000.”

According to Hay, since that first complex, several others have been developed and four others are under construction. “For an apartment off the lakefront, sale prices have ranged from $350,000 to $750,000.”

He says lifestyle blocks are in a consolidation phase with few on the market and steady enquiry. “There were nine sales of lifestyle blocks in July 2006 with an average sale price of $389,000 compared with five sales in July 2005 at an average sale price of $377,300.

“In my 23 years in Taupo real estate, I’ve never witnessed noticeable declines in values despite a share market crash, two recessions and other world crises. In times of uncertainty, Taupo values sometimes remain static, with most sellers holding on to their properties, and when the market moves again, Taupo is usually one of the more favoured areas.” 

“Following 9/11 in 2001, the market surged in Taupo and remained buoyant for three years. Many ex-pats and international buyers were drawn to the safety of New Zealand and they saw Taupo as one of the premium areas in which to invest. Since mid 2004, the Taupo market has consolidated somewhat, with sales numbers returning to the levels of pre-2001. Values have continued to increase.”

Surveys conducted by Harveys indicate that international buyers are steadily increasing to now account for around 18% of all sales. Local investors make up 52% of all sales, with national investors making up the remaining 30%. Hay says clients generally view Taupo as one of the prime investment areas of New Zealand. They consider the central location a big plus, as well as the amenities. Taupo not only offers world famous fishing and hunting opportunities, but is just over an hour’s drive to major ski fields and two hours to popular beaches. “Add to that the clean lake, where a multitude of activities are undertaken. Taupo’s fresh and clean image, coupled with its reputation as the adventure capital of the North Island, is well established and spreading.”
 
He says strong tourism both nationally and internationally, coupled with a variety of local industries headed by extensive forestry resources, give the area stability.

Bayleys residential property research confirms value growth in the Taupo area over the last five years was particularly strong for the 12 months to March 2003 and similarly for the 12 months to March 2005, with an increase of 25% and 24% respectively. The company’s research reveals both these periods of strong value growth have been followed by more conservative growth as the market adjusts to the new price range. The report states that the slowdown in median sale price experienced this March quarter is also in line with the New Zealand residential market, which has slowed appreciably from the levels experienced over the last few years.

The report further states that with an increasing number of people settling in the area, the demand for housing has increased, which has caused strong movements in sale price.

Tony Hay says Taupo’s historical stability paints a rosy picture for future investors. “With no significant setback in values in my 23 year experience in Taupo, as both an investor and a real estate agent, and continued interest in the area, Taupo stands out as a dependable investment opportunity. Strong growth through 2002, 2003 and 2004, with a consolidated period since then, points to a new growth phase occurring in the next year or two.”

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