A rash of high-value commercial transactions has confirmed New Zealand’s emergence from the global property downturn with total sales for 2013 at a six year high.
“The recovery is being reflected across all sectors of our business. The market is rebounding in terms of transactional volume, positive results and confidence, and increasingly demonstrates it has moved to the next stage of the recovery from the global financial crisis,” says Nick Hargreaves, managing director of Jones Lang LaSalle.
John Binnings is Jones Lang LaSalle’s sales and investment broker. He says the agency has seen more interest in the past year than he has ever seen from international investors looking for the safety and relative stability of the New Zealand market.
“With several successful capital raisings on the stock exchange — including Argosy Property, DNZ Property Fund and Precinct Properties, 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,” he says.
He added that the clearest trend of the year had been the increase in international players keen to invest in the New Zealand property market.
Despite an overall improvement in the industrial market a slight shortage of available space has slowed recovery. “The Auckland market in particular continues to show good balance between supply and demand, with vacancy across the board remaining steady and low,” explained Sam Smith, JLS’s national director of industrial sales and leasing.
“We saw industrial space swallowed up quickly as momentum between supply and demand balanced out, with no significant movement in rent,” he said. “With a limited supply of industrial stock within consolidated areas, tenant options are restricted and, in an improving market, design-build requirements are increasing. As a result of the pressure of this demand, industrial landowners are beginning to release land for construction.”
One commercial area that has seen good improvement in the past year is the leisure property sector. Several office-to-hotel conversions are under way in Auckland, with the capital’s former Reserve Bank building being converted to a 133-room Sofitel Hotel and the former Swanson Towers becoming a Travelodge Hotel with 104 rooms. In Wellington, an estimated $35m [£17.5m] is being spent adding several floors to the top of the old Enza head office in Bolton Street, converting it into a five-star Sofitel.
