Commercial

Beating the long-term average

More than $2.6 billion of commercial property was sold across the country in the second half of last year beating the long-term average.

Friday, May 20th 2022

The transaction volume was across 141 sales of properties worth $5 million plus, CBRE’s latest Transaction Monitor reveals. 

The biggest sale was a development site at 121-135 Beaumont Street in Auckland’s Wynyard Quarter, which will be developed into a mixed use commercial and residential project.

During the second half of last year, the industrial market was the strongest performer, with 72 sales totalling $969.5 million or 38% of the total sales volume.

In Auckland, two properties at Hugo Johnston Drive in Penrose were the biggest transactions. Goodman bought 35 Hugo Johnston Drive for $60.5 million. This was followed by 121 Hugo Johnston Drive selling for $57 million and 21 Hobill Avenue, Wiri for $42.1 million.

Retail activity lifted with a focus on Christchurch. The Palms and Barrington shopping malls were sold for a total of $154.3 million. 

The biggest retail sale in Auckland was Bunnings New Lynn which was sold to a local private investor for $55.8 million.

Development sites were also actively traded, especially in Auckland. As well as the Beaumont Street, a site at 470 Oruarangi Road, Mangere was the second most expensive and will be developed into a light industrial park.

The office market was quieter with 10 sales totalling $307.1 million, compared with 26 sales totalling $891.2 million in the first half of last year. The biggest two sales were 8 Commerce Street in Auckland’s CBD for $52 million and 518 Colombo Street in Christchurch’s CBD for $43 million.

Private investors dominated the market in the $5 million plus market, selling $1.4 billion in assets, accounting for 76% of total transaction volumes and bought about $1 billion or 52% of total volumes.

Syndicators were the biggest buyers, which aligns with the general long-term trend for this segment of the market, although they accounted for a lower percentage of purchases than in recent times.

Syndicate transactions included selling one asset of $60.5 million and buying five assets for a total of $143.6 million.

In the second half of the year there were 66 transactions in the $5-10 million price range against the 10 year average of 45. In the $10-20 million bracket, 39 transactions were recorded against the 10 year average of 25 and in the $20-50 million range there were also 25 transactions against the decade average of 19. In the topmost bracket of $50 million plus 11 transaction were made , higher than the 10 year average of nine.

Since 2018, syndicates and institutions have been the two main buyer groups (incorporating both purchases and sales). In contrast, wealthy private individuals have come main net sellers, with the “others” category (mainly owner-occupiers) continuing the declining trend of property ownership.

CBRE’s head of research Zoltan Moricz says the gap between net sellers and net buyers has been expanding quickly since 2018. “Private investors lead gross investment volumes (buying), reaching $20.8 billion over the past 10 years. Institutions account for $15 billion over the same 10 year period.  

CBRE’s transaction monitor shows overseas buyers bought three assets for a total of $154 million while others sold off four assets for $130.9 million .

Australian buyers dominated the off-shore investor market, with the DiMauro Group buying The Palms shopping centre in Christchurch, while another sale of four hectares of vacant land at 11 and 21-41 Kirkbride Road, Mangere in Auckland was made to Fife Capital.

An investor from Thailand bought a Christchurch hotel, making up 12% of the total overseas buying volume.

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