New Zealand has and will continue to experience excellent long-term growth in tourism. The attractions of the country are typically described as unspoiled scenic beauty, ease of travel and our comparative safety away from the hotspots of the world. These attractions are likely to endure and for this reason investment in tourism property within New Zealand is regarded as a worthwhile investment.

In recent years there has been a significant increase in interest from international investors looking to secure property investments in New Zealand. This interest in investment has not been confined to the major cities and regional centres of population, but has been widespread around the coastlines, lakes and waterways, and the small towns and countryside. As a consequence property values have risen markedly in most regions throughout the country.

Astute investors have purchased tourism property in areas on the tourist routes which encompass both cities and regions and have not only secured reasonable yields but also had this underpinned with excellent capital gain.

Because rentals from tourism property are in the main a factor of the leasehold business performance rather than relative to real property value, some would argue yields are not as good as may be achieved in other forms of property investment. However there are other factors to consider, viz.

• In tourism property the lessee has not only a requirement under the terms of a typical lease, but a vested interest in maintaining the land and buildings to a high standard. To this end the lessee assumes responsibility for repairs and maintenance, cleanliness and appearance of the buildings and landscape that say compared to the owner an industrial building this is an attractive proposition.
• Unlike other property leases the lessee of a tourism property has an interest in securing a long-term lease from the outset in order to secure tenure for their business activity.
• As the lease term decreases, goodwill effectively transfers to the lessor providing options for the freehold owner to negotiate consideration for a lease extension with the lessee or plan ahead; maybe for example to assume the lease, renegotiate or sell a new lease or redevelop the site.
• As a purpose built accommodation site, a tourism property is unlikely ever to be unable to earn income. Rental units, industrial sites and the like can remain empty for long periods yielding nothing for the investor. In a worst case scenario, a lessor could continue to operate a tourism property and earn income the day after a lessee vacates. The scenario where a lessee of tourism property simply or unexpectedly vacates is less common than most other forms of property investment.

Investment in the land and buildings of tourism property is therefore a very sound proposition for astute investors.