Investors choosing the ‘$5 million plus sweet spot’

Investors choosing the ‘$5 million plus sweet spot’

Auckland, November 3, 2017

Auckland continues to be the dominant force in New Zealand’s commercial property sales activity, while the preferred assets for investors are at the higher end of the value spectrum – the ‘$5 million plus sweet spot,’ Colliers International’s November Research Report shows.

The report, released today, found that investors this year have been purchasing assets at the higher end of the value spectrum ($5 million and more), accounting for more than 63 per cent of total sales value.

There has also been a corresponding decline in the $2 million to $4.9 million sales segment.

Auckland accounts for 59 per cent ($2.7 billion) of all commercial sales activity by total value, eclipsing other main centres.

Industrial property is still the favourite among investors, making up 38 per cent ($1.7 billion) of the total value of commercial sales so far this year, 52 per cent of which have transacted in the $5 million plus price segment. Office sales are up to 26 per cent, compared with 22 per cent in 2016 (full year).

Despite sustained growth in these areas, the aggregate value of New Zealand commercial sales for the 10 months to October 2017 has reached $4.5 billion, made up of 2,099 sales. At the same time last year, sales were 73 per cent higher ($7.8 billion).

Colliers International Research and Consulting Research Manager Leo Lee says we are in a new phase of the cycle as the availability of prime assets for sale will continue to be scarce.

“The evident decline in sales volume and value is predominantly due to the lack of assets for sale and demand for investment remains buoyant, he says.

“The value of New Zealand’s commercial property sales is lower compared with 2016, and this is no surprise considering the previous three years have been New Zealand’s most active, with sales such as the Millennium Centre in Auckland for $210 million.”

Outside of Auckland, Canterbury’s proportion of commercial sales grew to 12 per cent ($522 million) while Wellington’s dropped to 6 per cent ($270 million).

The report also reveals that Hamilton and Tauranga continue to be the regional hotspots.

New_Zealand_Research_Report__November_2017.pdf

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