Todd Lauchlan: JLL New Zealand Managing Director on New Zealand ranking among the world's most transparent property markets

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The Mike Hosking Breakfast 4 min 1 speaker 6 chapters transcribed 1 hour ago
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Why does New Zealand rank 7th globally in real‑estate transparency?

Mike Hosking 0:00
Interesting new insight into our property market. This is the new JLL index. We rank seventh globally out of 88 markets for real estate transparency. We are second, in fact, in the Asia-Pacific region. 13 highly transparent markets attract 80% of global property investment. Volumes were up 64% in a couple of years, which equates to $1.4 trillion. That's US, by the way. Todd Laughlin is the JLL New Zealand MD and head of capital markets and is with us. Todd, very good morning to you. Morning Mike, how are you? Very well indeed. Is 7th where we sit normally?

How big is the gap between New Zealand’s current score and becoming the top transparent market?

Mike Hosking 0:29
Are we about the same?
Todd Lauchlan 0:31
Yeah, we're about the same. We've nudged up in terms of our performance and score, but we're about the same as we've always been.
Mike Hosking 0:37
And so what's short of us being number one? What do we need to do and how big a gap is there between where we are and where we could be?
Todd Lauchlan 0:44
I think it's probably more just size, Mike. I think if we were bigger and had a bit more liquidity, a few more transactions... And probably just that depth of market information would be able to drive us up a bit more. I think the reality is for the size of our country, we're doing really, really well. We're doing better than Singapore and, for example, places like Ireland. It's the smaller markets we probably compare ourselves more to.
Mike Hosking 1:05
Okay, so 101 this.

What factors define a highly transparent property market in New Zealand?

Mike Hosking 1:07
What is highly transparent? What does that mean?
Todd Lauchlan 1:10
It just means you have really good information. You have, I guess, a good legal system. You can do a deal easily and efficiently. It ultimately means you can buy and sell with confidence. And it just reduces that risk premium that investors would otherwise be looking at if you were going into a market. Let's say less transparent, you pay less for that same particular property. That's probably the simplest way of describing
Mike Hosking 1:34
it. We came first in transaction process. Is that what it means? Literally, I see a building, I want to buy a building, and the transaction process is complete and transparent.

Why does JLL say New Zealand’s transaction process and legal system give investors confidence?

Mike Hosking 1:42
We're as good as anyone at that bit of it.
Todd Lauchlan 1:45
Yeah, we are. We've always been. I mean, the whole legal profession, the way that the law society manages real estate transactions, the fact that we don't have stamp duty, land tax, And as of yet, capital gains tax, all those things obviously allow us to transact really simply and easily. And the whole system is based on a really strong titling platform that's been in place for decades. So it just works. And I think that provides real certainty and confidence. At the end of the day, people want to protect their capital.
Mike Hosking 2:13
Exactly. Can I ask a really weird question? Why wouldn't everyone do this?

How does foreign investment affect New Zealand’s commercial property sector and politics?

Mike Hosking 2:17
Why would you want to make it opaque or murky? What's the point of that? Are you just useless or have you got nefarious
Todd Lauchlan 2:23
reasons for it? I think, I mean, you look at some of the countries that have the lowest scores, I mean, you wouldn't be surprised. There are markets where, you know, the government's more authoritarian, for example, or, you know, you've got a whole society that's not based on transparency. So I think if you're talking about liberal democracies and markets like New Zealand, you know, I guess Anglo economies.
Mike Hosking 2:46
Okay. Is this mainly commercial or is it the whole property market?
Todd Lauchlan 2:51
It's the whole property market, excluding housing, so everything other than housing. So that includes your sort of alternative sectors like data centres and student accommodation. But, yeah, I guess what we're seeing at the moment is really strong demand in that student accommodation and retail property market. Right.

Which commercial property segments are seeing the strongest demand and new projects?

Todd Lauchlan 3:10
Seems like the investors are coming back strong in that space.
Mike Hosking 3:13
That's encouraging. Is there a political element to that? Because some of us get a bit angsty around, you know, foreigners coming in with their money and buying up stuff that we would perceive to be our own.
Todd Lauchlan 3:23
No, I mean, the reality is we've had direct foreign investment in real estate since the 80s. Investors have done well here. They've invested here and they've developed. New projects, I mean, Keppel, for example, a big Singaporean investor just invested with Precinct in a student accommodation development in Stanley Street.

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