Rise in crop land value
HORTICULTURAL land has been the big mover in the three years between revaluations, rising 36 percent between 2014 and the 2017 revaluation just completed.
Opteon, the company that carried the 2017 revaluation, told Gisborne District Council in a presentation that the value of the district rose from $8.9 billion to $10.9 billion.
Opteon director Mark Grinlinton and Gisborne manager Ben Inder said the average increase for the 23,000 assessments was 22.3 percent, with rural properties increasing more than urban.
Horticultural land rose by the largest percentage, from $790 million to $1.2 billion.
They told the council the prime Poverty Bay soils were in high demand, with a lot of recent attention from outside the district for high-value kiwifruit and apple developments. Much of the increase in the past 12 months was in land value arising from unprecedented demand for quality well-located horticultural land.
Pastoral land was a star performer, with values up by 33 percent to $1.4 billion.
A steady recovery in 2014 led the way to a very strong run in the past 12 months, with values now up on the previous peak in 2007.
There was strong demand from existing profitable operators looking to expand. Lack of properties on the market and low interest rates were fuelling competition. The manuka honey market was increasing land values on the more remote marginal farms.
There was an overall 16 percent increase in forestry, mainly attributable to the significant lift in the carbon price from 2014 on post-1989 land. Post-1989 forestry and manuka land would provide pastoral farmers with a carbon sink opportunity when agriculture is included in the emissions trading scheme.
The residential and lifestyle market had been increasingly buoyant since mid-2016, rising by 21.3 and 17.4 respectively.
Average capital value for the 12,922 residential properties with a house was $290,500, up 21.28 percent.
Average capital value for the 2059 lifestyle blocks with a house was $460,500, up 17.8 percent.
Overall capital value of commercial properties was up by 14 percent and industrial ones 15 percent.
Little rental movementRentals had not shown much movement, with a handful of office rentals for newer or good quality space showing an increase. Older office space, especially if an earthquake risk, was at lower rentals and difficult to lease out.
Mr Grinlinton said in urban valuations, chattels such as carpets were not included, and for rural ones pine trees were excluded. They were considered a crop. Also not included were gold kiwifruit, dairy shares and manuka. Only trees that produced a marketable crop, vines and citrus were valued.
Manuka had slipped through and the powers that be were trying to see how they could include it.
Larry Foster said because forestry was not included the council was missing out on opportunities for a rating base.
Andy Cranston said there was no one sector of the ratepayer base that was going to be hit, because their valuations had gone up differently.
Brian Wilson said when value rose 35 percent on a $10 million property, it was lot more than 22 percent on a $200,000 one. That had a distorting effect.
Mr Grinlinton said the key thing was that the valuation was set at July 1. Whatever happened after a change of government did not affect it. Valuations were always out of date.
“You always have to look at the valuation date.”
There would be significant value uplift coming in the next two or three years and there was potential for the council to capture this growth for rating purposes.
“The horticultural guys are probably the wealthiest guys in your district at the moment.”
There was a remission on vines and structures that was bringing the value down and that was something the council might need to look at. People were paying $270,000 a hectare for a gold licence and still expecting a 10 percent return.
Mayor Meng Foon said the council had a big job to do with valuations and how it was going to treat them in terms of rating.