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News Release

Auckland

Record of all records


 

 

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​The volume of commercial property sales has reached its highest level on record. Year to date, Investors have acquired more than $2.8 billion worth of New Zealand’s industrial, retail, and office properties compared with $2.1 billion in the previous year; making this the largest volume of commercial property stock transacted.

JLL, who track every commercial transaction in New Zealand above $5 million, is forecasting this already record figure to reach well over $3 billion before the year end, with a number of large commercial properties still to transact. Total sales volumes are up 25 per cent over 2013’s full year volumes and both Auckland and Wellington have hit record levels of sales.

Nick Hargreaves, Managing Director for JLL says, “These record figures prove to investors that there is a significant amount of liquidity in New Zealand and local, Trans-Tasman, European and Asian investors see New Zealand as a leading destination for capital and a key location in the Asia Pacific region. The yield spread available on prime assets in New Zealand is relative to regional peers and the growth outlook means we are seeing a number of global institutional investors looking to include New Zealand as part of their wider global allocation.”

Hargreaves continues, “Whilst we are only in October, sales volumes are already at their highest and there is still well over $500 million expected to transact by the end of the year.”

JLL researchers confirm Auckland’s total sales are sitting at $1.89 billion year to date with sales volumes up 8 per cent from 2013. The real winner is Wellington which has increased at a faster rate than Auckland, with a 46 per cent increase in the total number of sales and highest recorded level of $488 million worth of transactions.

Justin Kean, National Director of Research & Consulting for JLL says, “Now that institutional commercial property stock in Auckland is being actively pursued by investors, we are seeing investors step outside of their traditional focus moving away from Premium/Grade A assets to Grade A/Grade B assets. Also investors are now looking past Auckland for stock which is largely the reason we are seeing Wellington benefitting.”

“International investors have had an increasing level of access to cash this year, but the issue of ‘scarcity of quality stock’ remains. Premium assets are limited and Australia and New Zealand markets simply lack the supply of Trophy assets to meet the current need of investors.”

The biggest contributor to this years’ overall total was office transactions, making up 46 per cent of all sales volume and totalling over $1.3 billion, year to date. This compares to $1.1 billion for 2013. The largest recorded transaction this year was PSP Investment’s purchase of AMP Capital Property Portfolio for $1.2 billion which was made up of 18 properties across New Zealand.  The largest single asset to transact was The Lumley Centre which was sold to Deka Immobilien for $146 million with a yield of 7.1% though joint agents JLL and Knight Frank.

Other large deals of note include the sale of Auckland’s Pakuranga Plaza to Singaporean purchaser for $96 million, Grant Thornton House in Wellington sold to a private foreign investor for $63 million at a 7.4% yield, and the sale of Telecom Building C to Augusta Capital for $65 million at a 7.5% yield. Chorus House, 66 Wyndham Street Auckland was sold to a private onshore investor for $88 million.

The proportion of foreign capital that is finding its way into the New Zealand commercial property market has also significantly  increased with a total of 48 per cent of capital coming from foreign investors in 2014 compared with only 13 per cent in the previous year.

Nick Hargreaves concludes, “There are still a number of large pending sales that are due to transact including 152 Fanshawe Street and Eden Business Park, Auckland, that are both being marketed by JLL. We are likely to reach well over $3 billion by the end of the year which will make this year the largest volume of transactions in any given year by a clear margin.” 
Auckland continues to remain the main hub of activity in the commercial property space accounting for 68% of total sales volume in 2014. Wellington remains in second place with approximately 17% of all deals, with the remainder of New Zealand taking up the rest.