Commercial property transactions concluded in the first half 2024 show the industrial sector is still favoured among larger investors, with high quality retail assets also in demand.
CBRE Research’s newly-released Transaction Monitor report, which analyses all sales in New Zealand over $5m in value, shows just over $1 billion of commercial property was sold in the first half of 2024.
While this total transaction value was only about half the past decade’s average, and the lowest six-monthly value total since 2013, the several large-scale sales concluded demonstrate the demand for top-quality commercial property investments, said Brent McGregor, CBRE Executive Chairman.
“The market appears to be showing strong signs of moving on from its lengthy period of inertia and stagnation over the past 18 to 24 months. There has recently been considerable depth of bidding for prime assets, particularly in the industrial and retail sectors.”
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Two of the largest industrial transactions this year were concluded by CBRE following on-market sales campaigns. These were the GPC distribution centre at 20 Puaki Drive, Wiri and a logistics facility at 32 iPort Drive, Rolleston, leased to Lyttelton Port Company.
The GPC distribution centre, at 20 Puaki Drive, attracted six formal bids from domestic, American, European and Australasian prospective buyers, totalling over $750 million in bid value. The asset was sold to a partnership between global asset manager BlackRock and local property investor Mayfair Group.
The Christchurch property, at 32 iPort Drive, Rolleston, has a long term lease to Lyttelton Port Company and direct access to Midland Inland Port. It was sold to Booster KiwiSaver Scheme for $60m in one of the largest industrial property transactions ever recorded in the South Island.
Two further large industrial property transactions completed so far in 2024 include the Sorted Logistics facility at 471 Waterloo Road, Christchurch, which sold for $40.4m in a sale and leaseback deal. In Auckland, a property leased to French multinational dairy group Lactalis at 106 Pavilion Drive, Wiri, sold for $31 million.
The industrial sector led the way in the first half of 2024 in terms of transaction volumes, representing 31% of total sales, according to CBRE’s Transaction Monitor. This was well above the sector’s long term market share of 22%.
Retail property sales made up 23% of total transactions in the first half of the year. The biggest retail transaction so far in 2024 is the sale of Ponsonby Central in Auckland for $72m, followed by the sale of the Woolworths Waiata Shores Neighbourhood Centre, at 2 Te Napi Drive, Takanini, negotiated by CBRE.
The Waiata Shores centre was considered one of the best supermarket-anchored retail investments offered in the Auckland market for some years. It was sold to a local private investor following competitive bids from multiple New Zealand-based and offshore parties.
“Competitive buyer participation in recent large scale transactions underscores the depth and diversity of capital that has been patiently waiting for high quality New Zealand investment opportunities,” said McGregor.
“When best in class institutional-grade assets are offered, we are observing investors increasingly taking a long term view, seeing opportunities to buy ahead of the curve while market competition has been somewhat constrained.”
According to the CBRE Transaction Monitor, private investors (both as sellers and buyers) were the most active group during the first half, with private investors acquiring 73% of the total value of transactions over $20m.
After industrial and retail, the next most active sector in the first half was office (18% of sales) and development land (15%).
By far the biggest land sale for the six months to June 30 was the Rongotai ground lease portfolio in Wellington, made up of multiple properties on Tirangi Road and Kingsford Smith Street next to the airport. It sold for $105m to a company associated with Fran Walsh and Sir Peter Jackson.
Offshore-based investors are also more active in New Zealand this year compared to last, said Zoltan Moricz, CBRE Executive Director and head of research.
“Overseas investment activity in the $20 million-plus category was net positive, at over $40 million in total value during the first half of the year. This contrasts strongly with the net negative position of over $167 million for the last half of 2023, indicating a shift in offshore investors’ attitudes towards acquisition opportunities in New Zealand.”
With interest rates having recently softened by around 75 to 100 basis points across various tenures since July, along with the Reserve Bank’s OCR cut in August, transaction volumes are expected to increase further in the second half of 2024 as positive carry has re-emerged, Moricz said.
- Supplied by CBRE
