Wilson Collin
300238419
Blog 1 (revised)
Government Spending
The current Government policy aims to reach a $75M budget
surplus for the 2013/14 year (CHAPMAN, 2014) .
With a tax deficit of $637M we can expect to see further
restrictions on Government spending in the immediate future. (SMALL, 2014)
In Wellington City the NZ Government contributes to more
than 30% of office spacing in the CBD. With restricting Government spending vacancy
rates in the capital have increased. This will drive prices down further and
leave offices empty.
This is expected to have a negative effect on Welly Real
Estate as we can expect Welly to follow the capitals lead as Government
spending contracts over the next year.
This decrease in Govt. spending will drop the demand for
office spaces in Welly, increasing vacancy rates and will push prices down.
This will mean a lower commission and less business for Welly Real Estate.
As the Government continues to contract vacancy rates of
office spaces will increase. This will reflect directly as a decrease of income
for Welly Real Estate.
I think it is important for Welly Real Estate to keep its
foot hold in the Welly office building market. Schouten states “generally
corporates and government agencies were static (2012), but growth was coming
from companies with between three and 10 staff” (SCHOUTEN,
2014) .
For Welly Real Estate temporally moving away from big
cooperates to helping smaller upcoming businesses could cause them to pick up
some valuable clients.
Works Cited
CHAPMAN, K. (2014,
05 16). Government surplus on a knife-edge. Fairfax Media.
SCHOUTEN, H.
(2014, 01 25). Squeeze is on for office space in the capital. The Dominion
post.
SMALL, V. (2014,
03 11). Lower tax take sees Govt deficit blowout. Fairfax Media.
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