New research from CBRE demonstrates improving liquidity in the commercial property investment market, along with providing insights into emerging trends in buyer profiles and property sector preferences.
CBRE’s February 2025 New Zealand Investment Transaction Monitor shows that in the second half of 2024, almost $1.7 billion worth of commercial property was sold in New Zealand, across 97 sales (above $5 million in value).
The number of sales concluded and their total value were both higher than in the first half of the year.
The transaction volumes provide a clear indication of where investor preferences lie, said Zoltan Moricz, head of research at CBRE.
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“Transactions in H2 2024 indicate resurgent investor interest in retail, with three of the 10 largest transactions involving retail assets.
"These trends align with CBRE’s investor intentions survey, which shows that investors, especially those with a countercyclical focus, are continuing a positive shift toward retail.
"Nine per cent of investors currently rate retail as their preferred sector for investment, up from four per cent in 2023.”
Development land is also receiving a notable increase in buyer interest. Residential development land, or development site sales that include a residential component alongside commercial, also feature in the top 10 sales, demonstrating the growing popularity of the living sector as an investment asset class.
While investment activity in retail and land is improving, industrial property’s run as investors’ most preferred exposure continues.
Brent McGregor, CBRE executive chairman, said industrial sales comprised 41 per cent of total transaction volume, well above the sector’s long term market share of 24 per cent.
“Five of the top 10 largest investment transactions involved industrial assets.
"One of the largest industrial investment sales was 470 Oruarangi Rd in Mangere, sold to global investment group BlackRock, the only offshore buyer to feature in the top 10 list.”
This illustrates the fact that local private and unlisted managed funds are still far more active in the New Zealand market than offshore groups. While offshore investors are becoming more active, overseas investment activity is well down on previous peaks as offshore capital is essentially still waiting in the wings, McGregor said.
“Once vendors become more comfortable that a good depth of buyer demand exists for larger assets in the $100 million-plus bracket, we will see more opportunities of scale placed on the market. This will encourage offshore groups to bid and, in turn, demonstrate liquidity at the high end of the value range.”
John Holmes, CBRE senior director, said the more significant proportion of development land among the top 10 transactions than usual also shows that larger-scale passive investors are holding off until suitable assets emerge on the market.
“60 per cent of the top 10 deals are passive investment assets, whereas in previous years, almost all of the top 10 would be pure investment properties.
"This again shows that large-scale capital has yet to return to the market. The buyers that are present now are often looking for opportunities that will create or add value.”
Another feature of recent transaction activity is the emergence of KiwiSaver funds.
Booster KiwiSaver Scheme, which acquired 32 iPort Drive, Christchurch, is a new entrant to the commercial property market. The deal was its first substantial property purchase for its KiwiSaver portfolios.
This deal is significant in that to date, very little KiwiSaver money has been invested directly into property.
Recent research from CBRE found that KiwiSaver providers’ allocations to direct/unlisted real estate are less than 1 per cent of their total funds under management. This compares with Australian super fund providers’ average direct property allocation of nearly 5 per cent.
Moricz said with total KiwiSaver funds under management exceeding $120 billion and growing by nearly $20 billion in the past year, combined with the superannuation industry consolidation occurring, this may be changing as more KiwiSaver funds achieve the necessary scale to meaningfully participate in direct property investment.
“As the local superannuation industry grows, the property market can expect to benefit from additional investment by KiwiSaver providers, which would provide a welcome liquidity boost at the larger end of the value scale.”
Tim Rookes, managing director of CBRE Christchurch, sad the iPort Drive transaction is also significant as one of the largest industrial property transactions ever recorded in the South Island. Unusually for a provincial asset in the current market, the campaign attracted bids from Asia-Pacific as well as domestic parties, he said.
“The international buyer interest in this asset demonstrated strong confidence in the industrial sector in Christchurch and the value achieved in the sale was a good marker for institutional-grade industrial assets here. Now that market conditions are improving we look forward to more high quality assets being offered to meet the growing buyer demand from local and international markets.”
McGregor said CBRE was involved in negotiating deals across a range of sectors within the top 10.
“The large-scale deals the team worked on in 2024 illustrate our expertise and connections throughout the market. While deal numbers and value remain low, our team has demonstrated a breadth of connections across sectors and investor groups, resulting in an instrumental part in concluding four out of the 10 largest deals in the second half.”
- Supplied by CBRE
TOP 10 SALES, JUNE-DECEMBER 2024:
1. Belmont land, Auckland: price confidential, sold to Summerset (CBRE)
2. Jack Stevenson Drive, Auckland: $66.5m, sold to FortHill Property Fund
3. 32 iPort Drive, Rolleston: $63.8m, sold to Booster KiwiSaver (CBRE)
4. 470 Oruarangi Road, Auckland (Villa Maria land): $63.5m, sold to BlackRock (CBRE)
5. 76-78 Hunua Road, Auckland (Fletcher land): $58m, sold to a private investor
6. 291 East Tamaki Road, Auckland: $56m, sold to Argosy
7. Orams Marine precinct, Auckland: $55m, sold to a capital partnership between Orams and Precinct Properties (CBRE)
8. Bunnings Westgate, Auckland: $51m, sold to Investore
9. Kāpiti Landing retail, Kāpiti Coast: $50.3m, sold to a private investor
10. Eastgate Shopping Centre, Christchurch: $40.6m, sold to Willis Bond.
