Foreigners snapping up commercial properties

11:00 AM Saturday November 1, 2014 Colin Taylor

Andrew Reed of Colliers.

More than half of $2.6 billion commercial property transacted so far this year in New Zealand, at individual prices above $2 million per sale, has been sold to foreign buyers although some transactions are still subject to Overseas Investment Office approval, says Andrew Reed, newly appointed national director of capital markets at Colliers International.

“There is a growing wall of overseas money waiting to be deployed into suitable markets and New Zealand is receiving unprecedented levels of interest from these investors,” says Reed who will work closely in his new role with Colliers’ capital market teams in Australia, Asia and other global markets.

“International investment into New Zealand commercial property has been a steadily growing trend for some years but 2014 has seen a rapid transformation,” he says.

Recent major sales to overseas interests include: the Lumley Centre on Shortland St, purchased by German fund Deka Immobilien; the National Bank Centre on Queen St, sold to Bloomberg Australia; and 50 per cent of the Vogel Centre in Wellington bought by Credit Suisse Singapore.

Reed says Colliers views the wave of global institutional capital as commencing in 2012 with the sale of Westfield Shore City in Takapuna, Auckland to Singapore-based Aviva Investors Asia Pacific Property Fund.

He says offshore investors see the benefits of investing in this country as including a transparent tax and legal system, absence of conveyancing duty and capital gains tax along with the availability of appealing investment opportunities.  

“Investors are still mainly attracted to income producing assets, although we are also beginning to see a significant amount of interest in development opportunities.

“In addition to the strong interest New Zealand is receiving from Australia and Asia, investors from Europe, Canada, the USA and United Arab Emirates are all looking for opportunities in New Zealand,” Reed says. “And we forecast continued growth in offshore capital being attracted to New Zealand.”

Chris Dibble, Colliers’ national research manager, says the Auckland CBD remains a key focus for many investors with prime office rents forecast to increase six per cent over the next 12 months.