Auckland, 8 August 2014 - Auckland’s office sector is one of the Asia Pacific (APAC) region’s leading commercial real estate investment prospects at a time when two major CBD office buildings marketed by CBRE have just been sold.
Chorus House at 66 Wyndham Street has just been sold for $84 million to a local private investor, and the remaining 50% interest in the former-National Bank Centre at 205 Queen Street was sold for $56.3 million on 4 June, on top of the $47.5 million paid for the first 50% in January 2014.
Office rental growth vs Office yield spread
This underpins CBRE’s latest APAC regional research, which shows across a number of metrics that Auckland:
- Is a high growth and high return market that offers Asia Pacific’s second highest yield margin over 10 years bonds for markets where rent growth is expected, behind only Tokyo
- Has been a strong rental performer during 2013, and offers some of the best rental growth prospects for 2014 at 7+%
- Has top investment performance prospects, with a consistent rent growth path expected over the next three years.
CBRE Senior Director Warren Hutt says that compared to major cities across the Asia Pacific, Auckland’s office sector offers the best of both worlds: “Auckland offers a double positive of high yields and high returns. This trend looks set to continue, with Auckland remaining one of the top three markets in terms of office rental growth and yield spread as we move toward 2016.”
Hutt says that the economic prospects underpinning Auckland office demand reflect the prevailing economic opinion, which says that net migration gains, the Canterbury rebuild and some upside to residential construction suggest that economic growth will be maintained through 2015, with growing supply pipeline to accommodate the demand.
“Although net take up in the Asia Pacific office market historically improves in the second quarter, and several major leasing deals are currently under negotiation and expected to close shortly, it remains challenging for big occupiers to find large contiguous spaces in major office markets in Asia.”
Hutt says that this all means that Auckland offers a strong opportunity with good timing.
“New Zealand property is seen as a sound long-term proposition. Long-term buyers, such as those from Asia, like New Zealand due to the attractive yields. New Zealand’s commercial property yields are among the most attractive in the developed world. Asian-based investors generally perceive good value for money in New Zealand where they are able to acquire quality high rise office buildings that may be out of reach for them in their local markets.”
About CBRE
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
