Second half of 2015 saw one of NZ’s strongest ever half yearly results
Auckland, 24 March 2016 – The second half of 2015 saw commercial property investment figures surpass pre-GFC levels, showing a strong increase in both the number and volume of transactions for the New Zealand market, according to CBRE New Zealand’s latest New Zealand Investment MarketView report.
Zoltan Moricz, Senior Director of Research for CBRE New Zealand, says that in the last six months of 2015, 136 commercial properties changed ownership, with transaction volumes totaling NZD$2,831m.
“The second half of 2015 was a particularly buoyant period for commercial property transactions across the country. Auckland led the growth path with 99 sales totaling $1,720m but Wellington has also extended its previous result, with 17 transactions totaling $682m, which is positive to see. Christchurch had 14 sales, totaling $212m.”
Key factors underpinning the headline numbers include:
Retail sector dominates investment landscape
The retail sector saw the most and highest value of transactions in H2 2015, with almost $1.1b worth of sales. Retail property made up 39% of sales volume, with office sales representing 30% and industrial contributing 17% of sales.
“There were a number of large portfolio style transactions by Scentre Group and Antipodean Supermarkets, who respectively sold $549m and $289m worth of retail property,” says Moricz.
Office and hotels sectors active
There were 39 office properties sold in the second half of 2015, including several major transactions, including the sale of 125 The Terrace for $65m, the Symonds Centre for $50m, Datacom House for $46m and Fonterra for $45m, bringing the combined total to $853m.
Four major hotel transactions were recorded in H2 2015, including the Novotel/Ibis Ellerslie Hotel for $55m, says Moricz. “Hotel sales made up $99.2m of transactions in this time period, showing that the sector is of high value and gaining investor interest as tourism to New Zealand strengthens, airport infrastructure and flight routes / frequency improve, and number of stays per night per customer increases.”
Local investors flex muscles
Moricz says that local syndicates and private investors made their presence felt in the investment market in H2 2015.
“The level of investment activity from Syndicates clearly surpassed what we’ve seen in previous periods, demonstrating the general long term trend for this investor type. In H2 2015, local Syndicates were net buyers, selling $141m of property, and buying $227m.
“Privates were the most active purchasers in the period, making up 44% of the transaction volume. Privates also showed a strong presence on the vendor side, with 54% of the total transaction volume attributed to this group. Over the last 10 years, privates made up 42% of vendors, so H2 2015 saw a strong lift in vendor activity from private investors.”
Institutions increase activity
Moricz says that a number of other purchaser and vendor groups increased their levels of activity in H2 2015, including Institutions (Listed Property Vehicles and other Managed Funds) which, as purchasers, increased to 40%.
“In the first half of 2015, Institutions purchasers made up 29% of activity, but in the second half of the year, that figure jumped by 11% to make up 40% of the purchase transactions. To put this activity in perspective, over the last decade Institutions averaged 27% of market purchasing power so the current result is well above historical averages.”
Offshore players net sellers
Overseas investors injected $1.01 billion in the New Zealand property market in the second half of 2015, and sold $1.15 billion worth of property. Australia was the most active offshore purchaser and vendor, selling $595m worth of property and purchasing $844m in H2 2015. England, the USA and China were the next most active in the offshore investment market.
Higher value transactions on the rise
Moricz says the latest market research shows upward pressure on prices, with transactions on the lower end of the value scale on the decline.
“The median transaction price for 2014 was $10.6m and in 2015, that median had shot up to $11.2m which displays a clear growth trend in the period following 2008. In fact, the average price growth over the last seven years was $410,000, so between 2014 and 2015, the price increase of $625,000 exceeds the annual average growth rate.”
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 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 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.