Biggest 1st half-year of commercial property sales volume since 2007, driven by development sites and syndications
The first half of 2016 has seen the highest first half-year total of New Zealand commercial property sales on record, according to the latest research published by CBRE.
CBRE’s New Zealand Investment MarketView research shows that in the first half of 2016 transaction volumes totalled $2.208 billion, as a result of 98 $5+ million value properties changing ownership. This surpasses the previous high of $1.68 billion in the first half of 2007.
The figures show a strong lift in the number of sales compared to the first half-years of 2015 (76) and 2014 (66), and only bettered by the 104 sales in 2007.
Zoltan Moricz, Senior Director of CBRE Research, says that the seasonal trend of sales volumes and values increasing in the second half of the year has been a distinct feature of the market over the last few years.
“The first-half numbers we are seeing this year are among the strongest we have ever seen. If the trend of stronger second-half-year periods is to continue, New Zealand could well see all-time record volumes and values of transactions this year.”
“Investment activity highlights that while retail and office are the most active sectors, development sites also feature strongly. In the current period, private investors have re-emerged as the most prominent purchasers, with 53% of transaction volumes, followed by the listed property sector at 25%.
“And a most noticeable trend has been the material rise in activity by syndicates. Syndicates were strong net buyers in this half-year period, which represents the general long term trend for this investor type.
“Syndicates sold $11 million of property and bought $378 million. There were seven properties bought by syndication, the largest include 2/4 Graham Street, the recently completed Mansons buildings which were bought by Augusta Capital for the total of $204 million and the Cider Building bought by Oyster Property Group for $93 million.”
This is underscored by Andrew Stringer, CBRE’s National Director of Capital Markets.
“We are seeing syndicators acquire very large assets of $80m-100 million, with another in the pipeline of over $200 million. Historically, syndicates have focused on the sub-$30 million realm, and this shift towards the upper end of the pricing stratum in our view demonstrates a maturity in this investment avenue.”
He adds that the market is well balanced at present.
“While there will always be a standout sector or location in any period, generally demand is consistent across all the main investable sectors, with broad participation from private investors, listed entities and syndicates.
“Although we have seen historically hjgh levels of sales activity over the last four half-year periods now, investor confidence has a strong basis in the current economic fundamentals, population growth in our main centres and relatively low alternative returns. This gives a strong expectation of very strong second half of the year and beyond.”
Regionally, the lift in sales has been led by Auckland, with 64 sales in the first half of 2016 totalling $1.4 billion, or 72% of the total volume considered nationally.
There were seven transactions above $50 million, the largest of which was Building A at 4 Graham Street which sold for $116 million by Mansons TCLM to Augusta Capital Ltd. Others include the Cider Building at 4 Williamson Avenue, bought by Oyster Property Group for $93 million, Building B/C at 2 Graham Street for $88 million also to Augusta Capital Ltd, University of Auckland Tamaki Campus at 261 Morrin Road for $81 million, and a development site at 121 Beaumont Street sold for $60 million.
12 development sites sold for a total of $403 million, 20 office buildings sold for a total of $473 million and 18 industrial buildings sold for a total of $159 million. Retail sales contributed $258 million across 11 sales. There were two hotel sales, totalling $12 million.
There were 15 transactions over $5 million in Wellington, totalling $422 million, and Christchurch had 11 sales, totalling $115 million. In Hamilton, the dominating transaction was a 50% share of The Base retail centre, at Te Rapa, which was sold for $192.5 million to Kiwi Property by Tainui Group Holdings.
Overseas investors injected $340 million into the New Zealand property market in the first half of 2016, but were net sellers overall, selling $600 million worth of property including the single transaction of the SCA portfolio of $267 million.
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