Iwi property clout is growing fast

The commercial property market needs to increasingly take note of where iwi plan to invest their treaty settlements, says Bayleys Tu¯ Whenua director Ward Kamo.

“Since the first settlements of the

1990s, the value of iwi assets has grown to almost $8 billion. Those at the front of the queue for settling their claims have the largest asset bases but as other settlements occur, the value of the combined iwi asset portfolio will grow significantly,” Kamo says.

“That means for people and businesses wanting to invest in New Zealand, iwi are key partners,” he adds.

Kamo believes investors should be focused on Iwi that are settling.

“In Auckland alone, there are 13 tribes that are in the process of settling. And while they may only be settling for $12 million, they have extraordinary first rights of access to land in this city and are looking for partners that get their mindset and are prepared to take the long view,” he says.

According to figures collated by economic consultants TDB Advisory, the collective asset base of the 70-odd iwi that have finalised Treaty Settlements with the Crown rose by $1.8b in

2017 to $7.8b, driven in part by six new settlements finalised in the past two years totalling $222m, and the above average returns on assets owned by iwi that have a strong bias towards property investment.

TDB Advisory’s iwi Investment Report 2017 found the debt levels of many iwi groups profiled were nonexistent, with only the most active investors, Nga¯i Tahu, Nga¯ti Wha¯tua O¯ ra¯kei and Waikato-Tainui, recording debt of between 10 and 17 per cent — relatively low compared to debt levels of most New Zealand companies.

The two largest iwi commercial property players are Nga¯i Tahu and Waikato-Tainui. Both have made major plays in their property markets. Their success suggests a way forward for iwi looking to grow their assets through commercial property. The key is how to maximise opportunities, Kamo says.

“The commercial property sector provides a sound investment option for many, with a steady outlook on growing returns in a growing economy. Tougher bank lending criteria will have a role to play in Iwi plans. In the current market, those with relatively clean balance sheets will be able to flex their muscles. But the issue iwi will face is capacity. They are price setters, but they still have to gear up. There are plenty of opportunities out there, they just can’t act on all of them, which is a good position to be in.”

Kamo says when working with iwi and the Ma¯ori business community, there are extra layers of complexity that can be missed if not truly understood. “Iwi consider not only the economic returns of a potential investment but also the social and cultural benefits. The balancing act is critical,” he says.

“Some classes of assets simply won’t produce commercial returns required of an asset management or holdings company. Equally, some classes of assets are required to be held by commiercially-minded people and businesses.

“Family values play an important role in identifying a pathway for success for descendants and wha¯nau. Most iwi leaders carry the weight of their peoples expectation on their shoulders. Accordingly, they will take commercial views that are not always market return based. The long intergenerational view iwi take will influence their investment return horizon as well. The saying ‘Whatungarongaro te t¯angata, toitu¯ te whenua’ sums it up: ‘People disappear from sight but the land remains’.”

Kamo says many iwi take the view Ma¯ori should be in the business of accumulating land. “Their point is that in a hundred years’ time, the tribes will have accumulated so much land they’ll be in the position they were before 1840.

“So for some iwi, low returns on land and property isn’t a huge concern if the over-arching goal is land accumulation. Iwi investment horizons could be so long price doesn’t really come into it,” he says.

“But equally, investment in land has to be done with an eye on growth. Iwi have to look at property from a yield perspective, or as a means to achieve the over-arching dream, which is to retain all land. The shortterm play may be to trade for the longterm gain.”