Erosion risks

• Stronger regulation (price-quality controls) reducing allowed returns
• Demand shocks (pandemic, recession, geopolitics) reducing passenger volumes
• Airlines shifting capacity to alternative New Zealand gateways (e.g., Christchurch)

Leading indicators

• Commerce Commission monitoring outcomes and any reform proposals
• Passenger movements and airline seat capacity trends
• Aeronautical charge resets and discount decisions

Counterarguments

• At the national level airlines can grow at other airports (Christchurch/Wellington), limiting absolute pricing power
• Government can tighten the regulatory regime if airport pricing is viewed as excessive

Erosion risks

• Execution risk and construction cost inflation on major projects
• Airline pushback if higher charges reduce demand
• Technological/behavior shifts reducing travel demand structurally

Leading indicators

• Capex delivery milestones and budget revisions
• Aeronautical ROI/return reviews by the Commerce Commission
• Passenger throughput relative to design capacity (congestion measures)

Counterarguments

• High capex can dilute returns if demand growth underwhelms
• Capacity additions can trigger tighter regulatory scrutiny and political pushback

Erosion risks

• Passenger mix or volume declines reduce retail/parking spend
• Off-airport parking and ride-share competition pressures parking yield
• Retail demand shifts to online and pre-order duty free models

Leading indicators

• Passenger movements and dwell time
• Retail spend per passenger and concession tender outcomes
• Car park occupancy/utilisation and yield (NZ$/space/day)

Counterarguments

• Travellers can reduce discretionary spend; captive location does not guarantee wallet share
• Ground transport alternatives can cap parking price increases

Erosion risks

• Re-tender risk (weaker terms at renewal)
• Regulatory or policy changes affecting duty free retailing
• Concession partner underperformance or financial distress

Leading indicators

• Concession renewal pricing and minimum-guarantee terms (where disclosed)
• Tenant sales performance and mix changes
• Bad debt/arrears and concession partner credit quality

Counterarguments

• Long contract terms can lock in suboptimal partners or economics if market conditions change
• A single large concession partner can increase counterparty concentration risk

Erosion risks

• Commercial property cycle downturn reduces valuations and leasing spreads
• Interest rate increases reduce property values and development returns
• Transport congestion or planning constraints reduce precinct attractiveness

Leading indicators

• Occupancy rate and rent roll growth
• Weighted average lease term and lease reversion spreads
• Investment property revaluation gains/losses

Counterarguments

• Tenants can choose alternative industrial/retail sites across Auckland if rents rise too far
• Property value is sensitive to macro rates and cap-rate expansion

Erosion risks

• Tenant defaults and renegotiations in downturns
• Large single-tenant exposure in logistics assets
• Development pipeline risk (cost inflation, delays)

Leading indicators

• Lease expiries concentration by year
• Tenant credit events and arrears
• Pre-commitment rates on new developments

Counterarguments

• Long leases may limit ability to reprice quickly in strong markets
• Revenue stability does not prevent capital value volatility from rates