By Alex Cook
For many years now, the management rights sector has acted as an irresistible magnet for New Zealanders seeking a sunnier life in Australia. Estimates vary, but the consensus is that two thirds of all management rights owners in Queensland hale from the land of the long white cloud. It isn’t difficult to see why. From a Kiwi perspective, the sector has provided access to a guaranteed income, combined with a great lifestyle, in one of the best climates in the world. From an Australian point of view, the influx has provided a generation of honest, hard-working managers looking to better themselves and the properties that they manage. No-one would question the high regard in which Kiwi accommodation managers are held.
Despite this seemingly perfect relationship, the number of fresh Kiwis making the move from NZ into the management rights sector has dropped dramatically over the past couple of years. Again, it is not hard to work out the reasoning behind this. Whenever the world reaches a difficult economic turning point, people naturally seem to ‘knuckle down’, ‘bide their time’ and ‘wait for things to blow over’. The general lack confidence in the global economy wears off onto each and every individual. However, for some New Zealanders the GFC has not been a time to bury their heads in the sand. On the contrary, it has been a time to explore opportunities and make things happen.
Paul and Cheryl Targett recently purchased a 42 unit residential complex on the Gold Coast through Resort Brokers Australia. To facilitate this purchase, they transferred their life savings from NZ over to Australia. When asked about the NZ/AUS exchange rate Paul said, “Sure it stings a little bit, but it’s a complete waste of time fretting about it. You could wait a year to see if it improves, but it could just as easily get worse during that time. What you need to remember is that the quicker you bring the money over, the quicker you can by a management rights and the quicker you will be earning Aussie dollars. If I’d waited a year, I would have lost out on a year’s income’. When you consider that Paul’s complex nets him over $100,000 AUS a year, this makes a lot of sense.
The same logic can be applied to real estate. We all know that the market in New Zealand is not currently setting the world on fire. So what? Houses are still selling, just not at the price most owners would like. You need to ask yourself whether you want your life to be dictated by the housing market or by your dreams for the future. For Graeme and Heather Francois, who have been running the beautiful ‘Bayview Waters’ holiday complex in Runaway Bay for the last 18 months, the choice was easy. “In a better market, our house in Napier would have been worth at least $650,000 NZ. At the time we decided to make the move to the Gold Coast, the best we could do was $500,000 NZ”, states Graeme. When asked if they had any regrets, Heather very quickly pipes up, “Not in a million years, we love it here’. The important factor is not what price you achieve for your house in NZ, but whether this price provides you with enough equity to make your next move. “We focussed on the end result of buying management rights in a spot that we would be happy, not on the steps we had to take to get there”, added Heather.
Let’s not forget that the real estate market is down on both sides on the Tasman. Despite the fact that management rights businesses continue to thrive, they are changing hands much less frequently than a few years ago. This can be at least partly attributed to the fact that there are fewer NZ buyers coming into the sector. As it stands, the supply to the market of management rights in Australia is outstripping demand. Naturally, this means that prices are falling – this applies to both management businesses and the associated real estate. With many forecasting that the market will bottom out over the next 6 – 12 months, now is perhaps the best time in years to be getting into management rights.
Huw and Lana Rosenberg moved from NZ back in mid-2008 to purchase their first management rights, again through Resort Brokers Australia. Since then they have gone from strength to strength and are now looking to grow their business by purchasing an additional management rights. “Don’t worry about the market when you are looking to get into management rights as there’s nothing you can do about it”, Lana says. “The likelihood is that what is happening in NZ will balance out with what is happening in Australia. The most important factor is to do your research and to buy a management rights that suits you.” Given the fact that there are more management rights on the market at the moment than usual, the options open to a buyer are far better. Undoubtedly it is buyer’s market, and the chances of finding the perfect business with the perfect unit at the perfect price are better than ever.
Australia is crying out for a new generation of Kiwis to make the plunge into management rights. There is a support network of expert professionals (agents, lawyers, accountant, financiers) ready and waiting to provide assistance. They will make the process far simpler than you may think. Don’t be shy, pick up the phone and speak to someone today….it could be the starting point of something amazing.