Auckland CBD sale reflects strong offshore investor appetite

75 Karangahape Road

The $23.3m sale of 75 K'Road is the third large CBD deal in a month

The $23.3 million sale of a seven-storey commercial building on Auckland’s K’Road shows offshore investor appetite for CBD properties with solid fundamentals remains strong.

The sale of 75 Karangahape Road, which settled last week, is the third substantial Auckland CBD transaction involving overseas buyers within the last month.

It follows the $40m sale of SkyCity’s seven-level car park building at 65-71 Federal Street, and the $635m sale of GIC and Goodman Property’s joint-venture office portfolio at Wynyard Quarter.

The Federal Street property was bought by Australian group ICD Property Investment, while the Wynyard Quarter portfolio was bought by US private equity group Blackstone.

Colliers International Capital Markets Director Blair Peterken, who brokered the K’Road sale with colleague Jason Seymour, says it was purchased by a private Australian investor.

“Offshore investors, particularly from Australia or Asia, are continuing to seek quality Auckland CBD properties, especially as pricing becomes more competitive in Sydney and Melbourne,” Peterken says.

“Having new groups like the purchaser of 75 K’Road, Blackstone and ICD Property investing into New Zealand tells a really positive about story about the ongoing stability of New Zealand’s economy.

“This trend looks set to continue, with new offshore buyers behind several other major transactions that are yet to be announced.”

Both Peterken and Seymour agree that increased buyer demand from offshore has created new opportunities for Colliers’ Capital Markets team to actively leverage well-established international networks to identify new buyers and work with them to successfully conclude a transaction.

“The fact that the buyers of both the Federal Street Car Park and 75 K’Road have not previously invested in New Zealand illustrates why marketing campaigns for major real estate assets in the current market must have international reach.”

Richard Kirke, International Sales Director at Colliers International, says offshore investors are attracted to New Zealand’s enviable economic growth.

“The economy’s success has been driven by strong migration-led population growth and a booming tourism sector, underpinned by the growth in construction of housing, infrastructure and commercial industry.

“The domestic outlook continues to look robust, with the OECD projecting solid growth of 3 per cent in 2018 and 2019.

“We are seeing unprecedented levels of new offshore interest in our major cities, and particularly in Auckland, where demand for large, high-quality investment and development opportunities is particularly high.”

Seymour says Auckland is the powerhouse of New Zealand’s economy, making it especially attractive to investors.

“Auckland’s economy has grown by 22 per cent in the last decade, reaching a record $83 billion in 2017.

“The city now contributes close to 40 per cent of New Zealand’s total economic output, ahead of Wellington and Canterbury at 13 per cent each.

“Population growth, booming visitor numbers and a strong construction pipeline, especially for housing, continue to drive Auckland’s growth.”

Seymour says the recently sold property at 75 Karangahape Road made for an appealing investment due to its fringe CBD location within Auckland’s education precinct.

“The property also has strong tenant covenant from two well-established tertiary education providers on long-terms leases.

“Tertiary education investments are globally sought after in the current market. The sale of 75 K’Road shows commercial property investors continue to see value in the sector in New Zealand.

“Strong tenant covenant is a key consideration for investors here. Large, established tertiary education providers in particular will continue to be attractive as tenants.”

Seymour, together with colleague Peter Herdson, National Capital Markets Director for Colliers International, also brokered the sale of the Federal Street Car Park on behalf of SkyCity.

“This transaction, at $24,375/sqm of land or nearly $94,000 per car parking space, illustrates the confidence and potential for growth that overseas investors and developers have in the New Zealand market.”


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Jason Seymour

Director | Capital Markets

Auckland CBD

Jason has 29 years international experience in commercial sales, tenant representation, lease negotiation, corporate real estate strategy development, property management and building services design.

Jason joined Colliers International in 1991 to establish the engineering division in the Wellington office, and took on a national engineering role in 1993, incorporating the Wellington Property Management division in 1994. Jason transferred as a Director to the Colliers International Bangkok office in 1996, and in 1998 returned to Auckland to take up a role in commercial leasing brokerage, where he was consistently one of the top four leasing brokers in the market. In late 2005, Jason transferred to the Corporate and Institutional Sales team, specialising in sale and leaseback strategies, land development and large corporate sales.

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Blair Peterken

Director | Capital Markets

Auckland CBD

After more than a decade in Australia’s highly competitive commercial property sector, Blair joined Colliers International NZ as Director in the Capital Markets team in April 2017.

Specialising in the sale of larger commercial assets and mixed-use sites around New Zealand, Blair brings a high level of energy and diligence to the industry. His extensive knowledge and educational background ensures he is well-equipped in progressing and developing the Capital Markets team.

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Previous Experience

From 2014 – 2017, Blair was Director and Head of JLL’s South Sydney office where under his leadership, the company  grew from third to first in the South Sydney market in both leasing and sales. In 2015 he was the company’s highest fee earner across the Australian industrial business. Blair specialised in the sale and leasing of larger industrial and commercial assets including mixed-use development sites within the South Sydney market.

Prior to this he was Head of Industrial, South Sydney at CBRE. While at CBRE, Blair won the prestigious Circle of Excellence Award twice for his performances and was highest fee writer in the South Sydney office in 2012 and 2013.

Peterken’s top transaction while in Sydney  was the 2014 sale of a 4.9ha business park in Rosebery, South Sydney to Meriton Group  for A$190,000,000

His two biggest leases were the single largest leasing transactions in South Sydney in their respective years. In 2011, he leased a Goodman-developed, 12,400sq m warehouse and office in Mascot to logistics company Toll, and last year, he leased a Meriton-owned 22,000sq m site in Pagewood to WSI Logistics.

 

A selection of notable sale transactions:

  • Sale of St Kentigern Girls School, Remuera - $40,000,000 +
  • The General  Buildings, 29-33 Shortland Street, Auckland - $42,000,000
  • 110 Symonds Street, Auckland - $38,500,000
  • 1-55 Rothschild Ave, Rosebery - $190,000,000
  • Central Park Business Park,  Greenlane - $209,000,000
  • Bunnings Hamilton South - $25,100,000
  • The Warehouse, Blenheim - $16,380,000
  • NZI Centre, Auckland - $63,000,000
  • Royal Heights Shopping Centre, Auckland - $17,000,000
  • 75 Karangahape Road, Auckland - $23,300,000
  • 5 Nelson Street, Auckland - $9,000,000
  • 66-80 Broadway, Newmarket - $65,000,000

 

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Richard Kirke

Director | Capital Markets

Auckland CBD

Richard is responsible for the promotion of New Zealand property to international investors, leveraging of his relationships developed in executive positions during his near 8 years in Hong Kong, as well as assisting to grow the company’s nationwide Rural and Agribusiness agency capability.

Richard began his real estate career in 2004 with CBRE, in the five years he spent with them (before leaving to run Colliers Hong Kong business in 2008) he was involved in many notable transactions including the sale of the Lion Nathan site in Newmarket for $162m, the sale of the GE & BNZ Britomart properties on behalf of Manson’s to the German fund HIH and portfolio sales, including the successful auctioning of 16 National Bank Branches across New Zealand.

During his time as MD of Colliers Hong Kong he was involved in the sale of 50 Connaught Road on behalf Apollo Group (a New York based Hedge Fund) to the Agricultural Bank of China for $US632m.

Richard was the Managing Director of Colliers Hong Kong office for six years from 2009-2014. During this time he was an active participant in several high value transactions and developed broad relationships with both Asian investors and colleagues across the region.

In late 2014, Richard agreed to run CBRE’s Asia Pacific Capital Market business, including their Capital Advisory (Real Estate Investment Banking) business, this further added to his knowledge of real estate investors, particularly in greater Asia.

As a senior executive of Colliers for 6 years in Hong Kong, Richard has strong personal relationships with Colliers personnel across the globe.

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