New Zealand is back on the radar of international investors
A recent survey undertaken by an international organisation representing global property investors has placed New
Zealand in the top ten list of investment destinations for the first time. ANREV (The Association of Non-Listed Real
Estate Investors) asked respondents what their top investment destinations were in Asia Pacific. For the first time in
the long history of the survey New Zealand featured at number eight on the top ten list. This indicates that New Zealand
is now a leading destination for capital; however international investors see it as a key location in the Asia Pacific
region.
Justin Kean, JLL’s Head of Research and Capital Markets says, “The economy in New Zealand has seen a good organic
economic recovery kick in the last 18 months. Positive pressure is warranting a firming of cap rates which is being
driven by a weight of both local and now international capital. Institutional investors are back in a buying mode and
this means that foreign wealth will start finding its way into the New Zealand property market”.
Kean continues, “To put this another way, ANREV represents investors with a total portfolio of some USD 2.016 trillion.
If international investors allocated just 1% of their assets to the New Zealand market we would see USD 20 billion of
capital head this way.”
The survey suggests that Investors are developing an appetite for increased risk, demonstrated by their preference for
value added funds as well as a clear interest in multi country/sector funds.
This year Japan ranks in first place as the most appealing destination for more than two thirds of investors, up sharply
from fifth place in 2013. For three years in a row, Australia ranks in second place, the preferred location for 62.5% of
investors and 63.6% of fund of funds managers. Japan ranks also at the second position for fund of funds managers, the
same level as Singapore; Greater China is again this year, the most preferred location in Asia Pacific for 90.9% of
them. And for the first time, New Zealand makes an appearance as eighth in the ranking.
There are a number of drivers to support this trend, JLL completed in depth analysis earlier in the year that covered
all large scale commercial property transactions that occurred in the New Zealand market in 2013. The underlying data
showed that the commercial property market in New Zealand has seen a major uplift in the volume of sales with over $2
billion transactions in 2013, the largest annual value of stock transacted in any year since pre GFC.
Andrew Brown, JLL’s Investment Sales broker says, “Capital raising has been significant in the New Zealand market over
the past year coinciding with Australia and Asia. Add to this the strong investment returns experienced by sovereign
wealth funds and large global investors and more capital is heading in the way of property globally and we will start to
see that impact on New Zealand over the year.”
Diversification is stated in the ANREV survey as the main reason to invest in real estate by both investors and fund of
funds managers investing in global real estate. It is also the first reason for investors domiciled in APAC followed by
enhanced returns.
Over half of Asia Pacific investors expect to increase their allocation to real estate in the next two years. Currently,
investors from Asia Pacific allocate the lowest share of their portfolio to real estate at 6.8%. But they intend to
increase their allocation by the largest amount, from 6.8% to 8.2%.
The critical part of this analysis indicates that JLL, with its depth of delivery in the New Zealand market and deep
network in Asia Pacific, is in the ideal position to access this capital.
This year’s ANREV survey was marked by a sharply higher number of respondents, with investors now representing more than
half of the total. The respondents included Institutional investors, fund managers and fund of fund managers from North
America, Europe and Asia Pacific.
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