Local investors most active as Christchurch commercial property market takes a first-half breath before the next run
| 17 September 2019
- $208 million in transaction volumes over first six months of 2019 -
CBRE’s mid-year New Zealand Investment MarketView research report reveals that local private investors were the most active buyers and sellers in Christchurch’s commercial property market over the first half of 2019, which saw an overall drop in the number and volume of transactions above $5 million.
The report details that:
Transaction volumes totalled $208 million, with 8 properties changing hands in the first half of 2019
Activity was dominated by local investors, in the form of private owners or syndications, with one sale by an overseas institution.
With $130 million, or 63% in sales volume, retail was the largest transactional sector in the first half of 2019. Development land sales followed at 20% or $42 million. Industrial sales stood at $27 million, or 13% by sales volume.
The largest sale involved Northwood Supa Centa at 1 Radcliffe Road, sold for $81.7 million by a Canadian managed fund to a local private investor. This was followed by the sale of EntX Christchurch Entertainment Central at 617 Colombo Street for $49 million by a local private developer.
The former temporary police station in St Asaph Street was sold for $25 million to a local investor, and a parcel of development land at 151 Hoskyns Road was sold for $17 million.
On the vendor side, private owners sold $118 million, or 57% by transaction volume. The ten-year average market share of private vendors stands at 39%, so the current result stands above the historical average.
Privates were the main purchasing group at 58% of the transaction volume, or $120 million. Syndicates purchased $6.7 million or 3% of sales volume, and corporations purchased $8 million of property or 4% of sales volume. Institutions in the form of managed funds purchased $17 million or 8% of transaction volume.
The number of transactions decreased in H1 2019 from the average of 13 per half-yearly period observed recently to 8 in the current. In the past six months, there were 3 transactions in the $5-$10 million price range, 2 in the $10-20 million range, 2 in the $20-$50 million range, and one above $50+ million.
Tim Rookes, Managing Director for CBRE Christchurch says, “Although volumes may be down, there is still demand particularly as syndicators chase product. The OCR is driving cash the syndicators way and Auckland yields are pushing this very active investor group to focus more and more on Christchurch assets.”
Richard Carr, Senior Research Analyst for CBRE New Zealand, says the volume and the number of sales in the region was modest compared to the previous six months. “This may be a seasonal pause that usually occurs during the first half of the year.
“The Christchurch trend is reflected across the country, as we have seen a continuation of a pull-back observed in H2 2018 from the strong growth recorded up to the first half of 2018. However, being the first half of the year, which is traditionally weaker, it provides a good basis for a strong annual result.”
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