Business assets worth twice New Zealand GDP

Business assets worth twice New Zealand GDP Article Image

Equipment Demand Index, New Zealand, February 2017

Businesses in New Zealand are nothing but independent and resilient as they seek to own their equipment outright, however, many of them are struggling under the cost of capital and lack of access.

This quarter the Equipment Demand Index takes a look at what’s making businesses tick and what their intentions are as they come to the end of their financial year.

Twice the Assets, Twice the GDP

The results from this edition of the Equipment Demand Index (the Index) have been combined with official data from Statistics New Zealand to create a picture of an economy which, although confident and growing rapidly, has even more potential for investment and growth.

Results from the research this quarter found that New Zealand businesses own assets valued at twice the country’s GDP, a large percentage of which could be utilised through alternative capital structures, freeing up critical funds for growth and expansion. We delve into why so many businesses choose to own their assets outright versus leasing.

An Investment Wave Continues to Build

All the economic indicators look positive for the New Zealand economy in 2O17, with growth tracking at 3.6 per cent, one of the highest rates in the developed world. The Alleasing Equipment Demand Index, has found that business and consumer confidence are at their highest levels in several years.

When Funding Assets Self-Sufficiency Rules

When it comes to acquiring assets, buying outright remains the most popular choice by some distance. In fact this choice is so popular that the value of New Zealand business assets is two times higher than the country’s GDP. Of all businesses that are planning to increase assets, 39.8 per cent say they are choosing to buy outright, with another 5.4 per cent opting to borrow from their bank to buy assets. But is this the best approach in the long term?

The Pressure Is On

Across the businesses surveyed in the Index, 19.6 per cent reported that capital constraints are hampering their expansion. We examine which business segments and regions are challenged the most as a result of capital constraints.

Download the report

Find out more about New Zealand business sentiment and intentions this quarter by downloading your free copy of the Equipment Demand Index.

NB. The research and publication of the Equipment Demand Index was conducted under Maia Financial’s previous name, Alleasing. Maia Financial is a leading, independent provider of capital solutions. We specialise in Asset Finance, Asset Management and Vendor and Intermediary services. Established more than 25 years ago, we have financed billions of dollars’ worth of assets, supporting the capital needs across various sectors (including mining, healthcare, manufacturing, agribusiness) and government entitles across Australia and New Zealand.