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Offshore interest continues to climb

Tags: Auckland Commercial Dunedin

Despite increased volatility on global investment markets this year and a slowing down of the Chinese economy, there continues to be strong foreign investment interest in New Zealand commercial property.

Bayleys Real Estate’s international director, Chris Bayley, says recent Southeast Asian seminars and visits encompassing Singapore, Kuala Lumpur and China have generated the strongest number of prospects out of all trips undertaken by Bayleys to these destinations over the past five years.

Mr Bayley undertook a series of presentations on the property market at New Zealand investment and immigration seminars organised by the Euro Asia consultancy group in Hong Kong, Singapore and Kuala Lumpur, with the other participations being immigration consultants Malcolm Pacific, business advisers Crowe Horwath, lawyers Gibson Sheat and ANZ Bank.

The first of these seminars was organised in conjunction with ANZ Hong Kong and was attended by a number of the bank’s high net worth clients.

“Two of the attendees have recently applied for residency in the $10 million investor migrant category and are keen on property,” Mr Bayley says. “We are looking to assist them through the ANZ, which is co-ordinating their investment in New Zealand.”

Wide range of investors unearthed

The Singapore and Kuala Lumpur seminars were also well attended, with close to 100 participants.

“These seminars and meetings held in between unearthed a wide range of potential investors. These included the former head of capital markets for a multinational investment bank in Singapore, who is looking at putting syndicates together for New Zealand investments around the $50 million mark.

“Another Singaporean investor who has just purchased in Australia is also looking for large-scale investments in New Zealand and is particularly keen on shopping centres.”

Following these seminars, Chris Bayley and Bayleys international sales manager James Chan visited existing and new contacts in Hong Kong and then in Guangzhou, including investors and developers.

Chris Bayley presenting at a Euro Asia seminar

Mr Chan says, if anything, the recent volatility in the Chinese sharemarket and the slowing economy has increased Chinese investors’ desire to diversify their investments to other parts of the world and New Zealand appeals as an attractive destination for both investment and lifestyle reasons. Declining project viability in a saturated development market is encouraging Chinese developers to look elsewhere as well.

Keen interest from Chinese buyers

“There has also been a significant depreciation of the New Zealand dollar against the Chinese currency – following a similar trend to the $NZ/$US exchange rate – which has increased the affordability of New Zealand property for Chinese investors and this is driving interest as well.”

Sold to Hong Kong Investor: These Mission Bay shops sold for $9.5 million

Chinese buyers have continued to show keen interest in New Zealand commercial properties this year, with investors from Hong Kong, Beijing and Shanghai buying a block of shops in Mission Bay, a shop in Queen St, both in Auckland, and an apartment hotel in Dunedin at a total value of over $20 million through Bayleys’ International Division.

The Mission Bay shops, located in a prime corner spot at the intersection of Tamaki Drive and Atkin Avenue, were sold for $9,500,000 at a 5% yield by James Chan to a longstanding Hong Kong client who also bought the Burger King restaurant in Westgate through him and who owns buildings in Queen St.

James Chan and Quinn Ngo, in conjunction with Alan Haydock of Bayleys central Auckland office, were also involved in the sale of 260m² retail unit 99A Queen Street to a Shanghai based purchaser for $6,660,000 at a 6.1% yield. It is leased to Oakley South Pacific Pty for 10 years from 2008, with annual rent reviews to CPI plus 1.5%.

Bayleys Dunedin office and the International Division also joined forces in the sale of Quest apartment hotel in Dunedin for $6.3 million to a Beijing businessman, with an engineering consultancy employing around 500 people, making his first investment in New Zealand. Robin Hyndman, a director of Bayleys Dunedin, says the buyer was attracted by the high income yield of 9.2% on the 10-year lease – a much higher yield than he would have been able to secure on a property of similar quality in China.

Mr Chan says there have also been a number of offshore Chinese investors bidding on auction properties in Bayleys’ Auckland auction rooms. A buyer based in Guangzhou bought a childcare centre in Mangere East for $1.32 million, at a 5.9% yield while another buyer from Dalian purchased a 3298m² residential development site at Te Atatu South for $1.78 million.

These sales followed a number of substantial transactions to Southeast Asian investors concluded by Bayleys in the latter part of 2014, including the sale for nearly $185 million to Indonesian and mainland China investors of three of the four buildings the agency sold in the Spark head office complex in central Auckland; the sale of the Pakuranga Plaza shopping and office complex for $96 million to Singaporean investors; and large land holdings in East Tamaki, West Auckland and Auckland’s CBD for close to $140 million.

Mr Bayley says while there haven’t been the same “big ticket” sales to offshore investors this year, this wasn’t due to any falloff in demand but rather reflected a paucity of high-value properties available for their consideration.

“New Zealand has a relatively small commercial property market in a global context and there is always a thin volume of quality $50 million plus properties available for purchase, with much of the supply in Auckland being snapped up last year.”

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