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News Release

Wellington Christchurch Auckland

Retail in hot pursuit of the office sector


 

 

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​With strong investor demand, transactions in the office sector continued to dominate the Christchurch ​commercial property market​ throughout 2014, following from the previous record set in 2013. According to JLL’s latest Transaction Trends report, total sales value in 2014 across the major sectors (office, retail and industrial) increased by 142% over the previous year. While office assets continue to remain the most popular class of commercial property, the real growth story of 2014 belonged to the retail sector.

NZD 2.1 billion of office transactions were completed in 2014, a 79% increase to total office sales when compared with 2013. Closely following was the retail sector with NZD 2 billion worth of transactions changing hands in 2014, an increase of a whopping 478% when compared with the previous year.

National Director of Retail Sales and Leasing at JLL Chris Beasleigh says, “Retail assets in the form of shopping malls and other large formats are now at the front of investor’s minds which has resulted in an all-time high of activity for retail and a level that has never been seen before. With large amounts of foreign capital driving up sales volumes, retail assets made up the majority of transactions in the NZD +100 million deals done, with only one office sale completed in this category.”

A large driver of this exponential growth was a number of large regional shopping centres that transacted, including GIC’s and PSP Investments. GIC purchased a 49% stake in five Westfield’s shopping centres for NZD 1 billion, whilst the PSP Investments deal added NZD 600 million to retail total. 

The industrial sector has likewise experienced further improvements in 2014, rising 32% when compared with 2013.
According to the report, private investors continued to make up the majority of individual buyers in 2014. Forty three percent of all deals settled during the year sold to private participants. Overseas investment into commercial property has reached a new high with NZD 2.9 billion worth of property purchased by foreign entities. Attractive yields, robust economic data, and stable risk profile have attracted foreign capital. Investors from Indonesia, China, and Germany were active in purchasing property in 2014.

Investors were actively focusing on large assets in the Prime segment of the market. Fifty-three transactions in the ‘greater than NZD 20 million’ category were completed in 2014, the largest number ever recorded by JLL in a single 12 month period. The smaller NZD 5—10 million segments also saw a number of transactions completed the largest since 2011, with 49 sales. 

“The investor pool is likely to remain balanced throughout the year with private entities as well as institutions, both local and foreign, playing a large role. A key factor in determining the sales profile for the year ahead will be the party or parties that purchase the balance of the Westfield portfolio and any of the large retail assets currently rumoured to be on the market”, says Justin Kean, Director of Research and Consulting at JLL and author of the report. 
Kean continues, “The New Zealand market is relatively new and unexplored on the international scene. The PSP and GIC transactions have focussed international attention on New Zealand as an alternative core proposition that also provides strong risk adjusted returns.”

Auckland continues to represent the market with 70% of all sales occurring in the Auckland region, strong demand for office assets put Wellington into second position taking 13% and Christchurch 7%.