Commercial market has 'barely taken a breather' after strong end to 2018
Strong investor interest is fuelling exceptionally high levels of activity in Auckland’s commercial property market for such an early point in the year.
Gareth Fraser, Auckland Director of Investment Sales at Colliers International, says the market has barely taken a breather after a surge in sales in late 2018.
“Last year started off slowly as a flow-on effect from the election in late 2017, but gradually built momentum to the point where it was then the strongest finish that we’ve ever seen.
“The third and fourth quarters of last year we’re the strongest I’ve ever seen in the real estate market.”
Fraser puts that down to New Zealand’s stable, growing economy and super-low interest rate environment.
He says the high levels of activity in early 2019 have been accentuated by the fact that this time last year was so slow.
“The start of 2019 is looking really good. It feels like that Christmas rush has really carried through into late January, early February.
“We’ve never had more activity in the pipeline and we’ve never seen so many hungry, cashed-up buyers beating down the door trying to buy something at this time of year.
“We can’t see things slowing down over the next 12 to 18 months. These are ideal conditions for investment at the moment.”
Fraser says the trends to look out for this year include the possibility of a capital gains tax on investment properties, and diminishing returns for residential investors.
“Labour’s position on capital gains is being very closely monitored and a number of our clients are commenting on that.
“I think we’re starting to see that owners are more willing to consider selling because of that uncertainty.”
Fraser says that at the entry level of the market, a lot more residential investors are considering commercial property investments.
“They’re really battling in that residential space at the moment and they can see themselves getting higher returns in commercial.
"Fraser also expects to see an increase in demand from government tenants in the next 12 to 18 months.
“That will ultimately lead to properties coming onto the market in the next 18 to 24 months with some really good leases with exceptional tenant covenant.”