The new lure of Hawke’s Bay

Hawke’s Bay has long been famed for its fruit and wine, drawing a steady stream of sun-seeking, Art Deco loving tourists each summer. But the once slightly isolated region has experienced a dramatic change of fortunes over the past couple of years as more Kiwis recognise what locals have always known - the region offers an enticing balance of lifestyle and commercial opportunity.

Key drivers behind the recent surge of interest in Hawke’s Bay as a place to live and work include a pandemic-driven urge for lifestyle change, the rise of technology allowing people to work from anywhere, and improved transport infrastructure. Add to that large, and largely thriving, horticulture and viticulture sectors that support a wide variety of supplier businesses, and you have a region that’s reached a crucial tipping point. Enough regional development has now happened or is in the pipeline that it is attracting further interest.

Residential snapshot

As in most growth regions, residential property sales have been a highly visible indicator of activity and interest in Hawke’s Bay.

Real Estate Institute of New Zealand (REINZ) figures for September 2021 show a 31.6-percent increase in house prices year on year, to a new record average price of $770,000. Within the region, prices in Central Hawke’s Bay District rose to a record average of $615,000 while in Hastings District the new record average price was $812,000.

As economist Cameron Bagrie from Bagrie Economics says, the property market in the region has gone “absolutely ballistic” and while in itself that’s not too different from other parts of the country, Hawke’s Bay could be a very strong beneficiary of inter-regional migration as, post-pandemic, people look to life in less densely populated areas that offer a more balanced lifestyle.

“The workforce and jobs are now increasingly mobile, where you can work from anywhere, and I suspect people are going to pull up stumps and get out of Auckland.”

While a lot of residential activity is focused on the twin cities of Napier and Hastings as well as Havelock North, residential sales are booming further south in the likes of Waipawa and Waipukurau as buyers look for lifestyle at a more affordable price.

As in many regions, housing supply is under pressure, though there are ongoing developments in all areas of affordability. Napier City Council’s draft district plan upgrades the number of new houses needed from 2,000 in 20 years across Hawke’s Bay to 3,500 in 10 years in Napier alone.

A recent release of more than 200ha of rural land for residential development at Western Hills near Taradale, should start to yield sales from mid-2022.

With the region having the highest per capita need for social housing in the country, Hastings District Council (HDC) has earmarked $12 million for affordable housing infrastructure to pool with a $16m central government contribution. The funds will go toward emergency and transitional housing as well as first-home buyer options. One of the first developments out of the blocks is Waingākau Village near Flaxmere.

Fuelling the commercial market

Kerry Geange, commercial manager of Bayleys Napier and Havelock North says though Hawke’s Bay has been steadily growing for some time, activity in the past couple of years has “blown all predictions out of the water.”

“There’s a lot of investment coming in and a heck of a lot of people moving here.”

What that’s doing, he says, is putting pressure on already limited commercial and industrial property stock right around the district.

“That’s driving commercial and industrial property prices up. The other aspect of that is businesses that might traditionally have rented premises are now looking to buy,” Geange says. That shift is in part being driven by low bank interest rates combined with the government’s change in deductibility rules for residential investment property. People are looking for new places to invest that give them a good return.

“We also have a lot of small to medium businesses here; those that provide support services to the apple growers or other big employers like the port. They tend to prefer to own their own premises, rather than pay rent to somebody else,” Geange says.

A changing approach to how businesses can operate, and how people can work is also making Hawke’s Bay an increasingly attractive option for both employers and employees.

“There’s a maturity to the local economy now that maybe wasn’t here 25 years ago. There’s a new willingness to commute to larger centres like Wellington and Auckland. They can be there in about 90 minutes.

“And people can see the advantage of shared workspaces, that let them work from home some of the time, but still have a small office to use when required. That’s changing the types of commercial spaces businesses are looking for.”

There are multiple coworking spaces now open around the region including The Hive in Hastings, Tech Collectives in Ahuriri and Havelock North and the Business Hub in Ahuriri which house key economic development supporters such as New Zealand Trade and Enterprise, Callaghan Innovation and the Hawke’s Bay Chamber of Commerce.

Chamber CEO Karla Lee says the rise of shared workspaces is a natural evolution resulting from the changing nature of Hawke’s Bay’s workforce. “For a start COVID has forced everybody significantly into the future in terms of digital transformation. Many local businesses wouldn’t have had any online presence before COVID. Now that’s just not an option. But going digital also means you can work from anywhere.”

Lee adds that there is an increasing number of small and solo operators entering the commercial landscape. Start-up support courses run by Hawke’s Bay Chamber of Commerce in Waipukurau and Wairoa are over-subscribed. “It might be someone made redundant as a result of COVID, or who has been doing something they love on the side, but they’re starting to formulate a plan on how they can build a fully-fledged business from a passion.” She predicts that will have a flow-on effect on the types of work spaces and commercial property in demand in the near future.

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