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News Release


Market booms with high-value sales

The global financial crisis is left behind as transactional volumn and investor confidence rebound



Long term investment with development potential/new-zealand/en-gb/news/916/long-term-investment-with-development-potentialAUCKLANDLong term investment with development potential
Former Fire Station on high profile corner site/new-zealand/en-gb/news/915/former-fire-station-on-high-profile-corner-siteCHRISTCHURCHFormer Fire Station on high profile corner site

Over the course of 2013 the New Zealand property market has continued to show positive results which have increasingly demonstrated that the market has moved to the next stage of the recovery.

Capital Markets

Justin Kean, Director of Research and Capital Markets for Jones Lang LaSalle, says, “The capital markets for property in New Zealand have seen considerable pressure from increasing levels of investment capital over 2013. With several successful capital raisings on the NZX and with several more likely to hit the market in the first half of 2014 there is no end in sight for the yield pressure that we have seen through 2013.”

The clearest capital trend that has come out of 2013 however, has been the hand played by mid-sized international players. John Binning, Director of Capital Markets at Jones Lang LaSalle says he is seeing more interest today than he has ever seen from international investors looking for the safety and relative stability of the New Zealand market. Binning notes, “We have sold $500 million worth of good sized properties this year to international investors who for the most part would be small time investors in their own market. However the appeal of the market story in New Zealand as well as the perceived upside compared to other markets globally means we have a strong level of appeal that is only likely to intensify over the next year.”

Office Leasing

Mark Grant, National Director of Markets at Jones Lang LaSalle continues, “Although certain properties and micro markets in the CBD are seeing good rental levels, overall there is a lack of transactional evidence that landlords can really pin their hopes to at the moment.  However, positive economic indicators have given occupiers confidence to relocate to higher quality premises in the Auckland CBD Core, an area that is currently experiencing tightening availability with a lack of new supply that will be restricted until the last half of 2015, with the full effect of new supply not being felt until 2017.

Grant continues, “With this positive net absorption in the Auckland CBD, we have also seen high levels of activity in the fringe and suburban areas, and expect to see a continued knock-on effect in these areas, with incentive levels declining as supply tightens across most areas.  Proactive owners who have been quick to refurbish existing space, present it well and capture this activity have been the net beneficiaries, and this trend will continue.

“Wellington is still feeling the effect of the Government reduction in occupied space, but A grade space is now tight and owners in the higher B grade buildings are now positioning themselves to capture this opportunity.

Grant concludes, “The rebuild in Christchurch is only now beginning to show some signs of momentum, but the cost of development has been a restricting factor and a strong note of caution for occupiers, many of whom are adopting a ‘watch and wait’ approach.”


In its most recent cycle of 2013, retail has remained the slowest moving asset class in terms of occupier demand. Research published by Jones Lang LaSalle shows that despite retail yields firming considerably over the past 12 to 18 months actual rental growth has been limited at best. This in many ways reflects, that despite an improving economy the retail sector continues to suffer from discounted sales at a loss of profit, as well as very strong levels of competition.”

Christ Beasleigh, Jones Lang LaSalle head of Retail says, “We have seen a very stable rental profile for most retail asset classes. 2013 showcased growth of the food consumption sector including cafes, bars, fast food and take-aways. We saw a number of new retail convenience developments this year which will continue into 2014. These developments were anchored by either fast food drive-thru occupiers or childcare operators taking new design built centres. Both of these two anchors will continue to grow next year especially with the ever expanding Auckland population.

“In 2014 we hope to see increased activity in the bulk retailer sector and more new retail development across the country including new shopping centres which we haven’t seen since the GFC with the expansion of Westfield Newmarket, Albany and St Lukes developments. We will also continue to see the expansion of luxury brands in Auckland which we are already starting to see in Sydney and Melbourne.”

Beasleigh concludes, “International big brands such as Zara, Top Shop and Forever 21 have opened in a 1900sqm retail site in Brisbane which were negotiated by Jones Lang LaSalle and should follow suit in New Zealand once they have completed their footprint programme in Australia. Exciting retail times to come.”


In the industrial market, there has been an overall improvement. The Auckland industrial markets continued to show good balance between supply and demand with vacancy across the board remaining steady and low. Sam Smith, National Director of Industrial Sales and Leasing, says, “We saw industrial space get swallowed up very quickly as momentum between supply and demand balances out with no significant movement in rent.

Rents have as a result remained stable both in primary and secondary markets, as has been the trend over the last few years and incentives have reduced. Investor interest in the sector in general is strong and yields have continued to contract as a result.

 “With limited supply of industrial stock within consolidated areas, tenant options are restricted and in an improving consumer market, design build requirements are increasing. As a result of this demand pressure, industrial land owners are beginning to release land for this purpose.”


The hospitality sector has experienced stronger upward movement over the past year. As consumer confidence has lifted on the back of robust economic fundamentals, people have started getting out and are spending more. Stronger tourism arrivals have also contributed to stronger spending in the sector, which has seen the largest increase since 2004, having risen by 4.6%. This rise in demand has translated into more hiring intentions on the part of businesses within the hospitality sector.

The New Zealand hotel market has reported strong trading fundamentals this year across all of the major city/ key tourist centres. 

Year to date November 2013, average occupancy and average room rate (ADR) figures are as follows:

Auckland Occupancy up from 76% to 79% ADR is up 2.9% to $139
Wellington Occupancy up from 73% to 75% ADR is up 1.8% to $143
Rotorua Occupancy up from 64% to 68% ADR is unchanged at $100
Christchurch Occupancy down from 82% to 78% ADR is up 5.6% to $159
Queenstown Occupancy up from 63% to 68% ADR is up 2.3% to $138

Stephen Doyle, Vice President of the New Zealand Hotels and Hospitality Group for Jones Lang LaSalle, says, “Supply is largely in check in most markets (with the exception of possibly Christchurch), with office to hotel conversions underway in Auckland and Wellington. The former Reserve Bank building in Auckland will become a Sofitel So Hotel (133 rooms), the former Swanson Towers will become a Travelodge Hotel (104 rooms) a further office to hotel conversion is underway on Queen Street by the VR Group which when complete will comprise 90 rooms.  In Wellington, an estimated $35 million is being spent adding several floors to the top of the old Enza head office in Bolton Street, converting it into a 130-room hotel, 5-star Sofitel Hotel.

Doyle continues, “Christchurch has seen several new hotels /re-openings over the course of 2013, such as Rendezvous Hotel Christchurch, Quest Christchurch, Copthorne Hotel Commodore, Heritage OGB Christchurch, Novotel Christchurch and Rydges Latimer Hotel. Chateau on the Park is scheduled to complete building and guestroom repairs, and Sudima Hotel has commenced a hotel addition comprising 42 rooms, with completion expected in late 2014.”

Doyle concludes, “It has been a very quiet in terms of investment sales through 2013 with no major 3-5 star hotels transactions of note, with owners possibly retaining ownership as we continue to experience an upward trend in the hotel market.”

Seismic Rumblings

Other impacts seen on the property market this year are the issues of seismic ratings. Ever since the Royal Commission of Enquiry released its findings on the Canterbury earthquake the property market has struggled with issues surrounding seismic grading. Although the value impact of various NBS ratings and the various rating systems remains opaque, the market is now at a point where wholesale progress can be made. Firms have now developed the skill set and have the employees to deal in wholesale terms with the challenges that seismic issues present.

Christchurch Clicks into Gear

As the three year anniversary of the Canterbury earthquake rolls around we are finally starting to see traction in the private sector re-build of the Christchurch CBD. There have been a considerable number of issues faced by the city through the reconstruction not to mention the delays caused by government, local government and insurance organisations, all of which have needed to work through considerable processes and issues, the majority of which are unprecedented across the industry. The upside however is that construction within the CBD fringe is now more than underway and office occupiers are now beginning to accept the rentals needed to trigger new developments in the CBD.