Commercial and Industrial Transaction Turnover Buoyant · latest June vacancy survey results...
Transcript of Commercial and Industrial Transaction Turnover Buoyant · latest June vacancy survey results...
New Zealand Research Report | August 2019 | Colliers International Research
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< $2 mil $2 mil to $4.9 mil $5 mil to $9.9 mil $10 mil +
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August 2019
Colliers’ annual national sales database for all
commercial and industrial sales1 shows 2018 was
another stand-out year, with the total value up 2.4%
on 2017. A review of 2019 deals so far and an
analysis of transaction activity over the past three
decades provides interesting insight on the year
ahead.
In New Zealand, the total number of commercial and
industrial transactions in 2018 reached just over
4,860 properties, representing $9.9 billion in total
value1. This is a couple of hundred short of 2017’s
total turnover, but up 2.4% in total value. Given the
lag in data reporting, total sales for 2018 could still
shift up slightly.
Office was the stand-out sector for 2018. There were
almost 600 sales representing $3 billion of
transactions, the strongest annual result for office on
record since our monitoring began in the late 1980s.
Industrial remains the stalwart of transaction activity.
Around half of all transactions in 2018 were in the
industrial sector, representing just under 40% of the
total value. This is a similar occurrence year in, year
out.
Despite the somewhat mixed market commentary
surrounding retail property, sales turnover in 2018
was around 2%, representing almost $2 billion. This
signals opportunities are still to be found.
Across New Zealand, the most transactions were
recorded in Auckland, with around one third of
transactions and a total value turnover of $5.5 billion.
The next two biggest cities, Wellington and
Christchurch, provided approximately one quarter of
sales volume.
Christchurch sales activity was just shy of $1 billion
in 2018 representing two thirds of the South Island’s
total transaction value.
Sales activity in Wellington climbed from 9.4% of all
transactions nationally in 2017 to 11.2% in 2018.
Total value of sales activity reached $930 million in
2018.
1 Commercial and industrial properties as well as vacant land that
transacts for $10,000 or more sold by any agency or privately.
Commercial and Industrial Transaction Turnover Buoyant Commercial & Industrial Sales by Sector
Source: CoreLogic, Colliers International
Commercial and Industrial Sales by Location
Source: CoreLogic, Colliers International
Commercial and Industrial Sales by Price
Source: CoreLogic, Colliers International
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No. of T
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Christchurch Region Rest of NZ
Total Transactions
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Commercial Mixed & Vacant RetailOffice IndustrialTotal Transactions
New Zealand Research Report | August 2019 | Colliers International ResearchNew Zealand Research Report | August 2019 | Colliers International Research
15%
17%
19%
21%
23%
25%
27%
29%
31%
2009
2010
2011
2012
2013
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2015
2016
2017
2018
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Q1 Q2 Q3 Q4
New Zealand Key Economic Indicators – August 2019
Mar-19
(yr rate)
Mar-19
(qtr rate)
Dec-18
(qtr rate)
Q-o-Q
Change
Mar-18
(yr rate)
Y-o-Y
Change 2020F* 2021F* 2022F*
GDP Growth 2.5% 0.6% 0.6% -0.1% 3.1% -0.6% 2.3% 2.6% 2.6%
Current Account (% of GDP) -3.6% NA NA NA -3.0% -0.6% -3.8% -4.8% -4.8%
Mar-19
(yr rate)
Mar-19
(qtr rate)
Dec-18
(qtr rate)
Q-o-Q
Change
Mar-18
(yr rate)
Y-o-Y
Change 2020F* 2021F* 2022F*
CPI Inflation 1.5% 0.1% 0.1% 0.0% 1.1% 0.4% 1.6% 1.8% 1.8%
Net Migration Gain (000's) 56 16 15 1 51 5 46 33 33
Retail Sales (ex-auto) 4.7% 0.5% 2.3% -1.9% 4.5% 0.2% 4.1% 4.8% 4.8%
Unemployment Rate 4.2% 4.2% 4.3% -0.1% 4.6% -0.4% 4.3% 4.3% 4.3%
May-19
(yr rate)
Apr-19
(yr rate)
M-o-M
Change
May-18
(yr rate)
Y-o-Y
Change
10 Year
Average2020F* 2021F* 2022F*
Tourist Numbers Growth -1.7% 1.3% -0.2% 5.1% -6.8% 4.4% 4.5% 4.0% 4.7%
Official Cash Rate 1.5% 1.75% -25 bps 1.8% -25 bps 2.37% 1.25% 1.25% 1.25%
90 Day Bank Bill Rate 1.7% 1.8% -9 bps 2.0% -30 bps 2.6% 1.5% 1.4% 1.4%
10 Year Government Bond 1.8% 2.0% -17 bps 2.8% -99 bps 3.6% 2.6% 3.0% 3.0%
Floating Mortgage Rate 5.7% 5.9% -12 bps 5.9% -12 bps 6.0% 5.4% 5.4% 5.4%
3 Year Fixed Housing Rate 4.7% 4.8% -11 bps 5.3% -54 bps 6.1% NA NA NA
Consumer Confidence 119 123 -3% 121 -1% 120 NA NA NA
NZD vs US 0.67 0.67 0% 0.70 -3% 0.75 0.65 0.65 0.65
NZD vs UK 0.51 0.52 0% 0.52 0% 0.50 0.49 0.47 0.47
NZD vs Australia 0.94 0.95 0% 0.92 2% 0.87 0.89 0.86 0.86
NZD vs Japan 75 75 0% 76 -2% 74 74 73 73
NZD vs Euro 0.60 0.60 0% 0.59 2% 0.60 0.60 0.62 0.62
Source: NZIER, Colliers International Research
*March year forecast
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So, what about 2019? Sales transactions for 2019 are
filtering through, and it looks like we will be off to a
modest start. This slower pace of activity is not due to
any disruption on investor behaviour arising from
proposed CGT as some original concerns suggested.
We have analysed transactions since 1998, which
indicate that there were only three times in the past three
decades when first quarter sales activity was
proportionally higher than other quarters, recorded in
2000, 2007 and 2008. It also came close in 1990 and
1997. These were of course all years of economic or
financial disruption.
There are no signs of that so far. The chart adjacent
highlights that over the past five years, first quarter
activity has stabilised at just over 20% of annual turnover.
With a similar number of property deals recorded in the
first quarter of 2019 as in the past few years, this gives us
guidance that 2019 is on track for a solid year of activity.
However, there is one new pattern emerging that has the
potential to offset the momentum. Since 2016, the second
quarter of the year has become the most active while
third quarter activity has slowed. This is a relatively rare
occurrence, recorded only twice before 2016 - in 1996
and 2007. If we do have a strong second quarter and a
lacklustre third quarter, it could suggest sales activity at
its lowest point since 2013. This could be exacerbated by
everyone focussed on the Rugby World Cup 2019, which
runs from Sep 20th to Nov 2nd. Only seven weeks to go!
Commercial Interest Rate Guide
Date3 Year Term
(Indicative Borrowing Rate)
Mar-19 4.47%
Apr-19 4.15%
May-19 4.06%
Jun-19 4.51%
Jul-19 4.41%
Aug-19 4.30%
Source: ANZ, Colliers International Research
Note: the lending rate quoted in the table is not necessarily
what you will be offered, and should be regarded as indicating
medium term trends.
Commercial & Industrial Sales Volumes by Quarter
Source: CoreLogic, Colliers International
New Zealand Research Report | August 2019 | Colliers International Research
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Wellington Auckland
OfficeAuckland CBD office space remains in solid demand as our
latest June vacancy survey results recorded a drop to 5.0%
vacancy rate compared to last year’s 6.2%. Prime vacancy
fell to a low of 2.8% representing less than 18,000 sqm of
available space. Secondary vacancy has dropped to 6.6%
compared to the previous year’s 8.1% vacancy rate.
A supply-side response is underway. Approximately 162,850
sqm of space is under construction. While this will add to the
total available space, pre-commitment rates are increasing.
Pockets of opportunity are available and coworking space
assists short-term requirements, but not all tenant
requirements match supply availability.
In Wellington, the overall vacancy rate reached a record low
5.9% with prime vacancy less than 1%. Secondary vacancy is
at 7.3%, well down from the 9.5% vacancy rate a year ago.
While leasing activity is up, less available space is also
attributable to office premises undergoing refurbishments
and/or earthquake strengthening.
IndustrialTwo major industrial sales in Auckland and Hamilton highlight
the ongoing attractiveness of the sector for local and offshore
investors.
Asia Pacific logistics specialist LOGOS has partnered with
Australia’s largest superannuation and pension fund,
AustralianSuper to extend the 10ha of land originally
purchased last year. The intention is to develop 24 hectares
of land in Wiri, Auckland, transforming the site into a $500
million logistics estate. Land values have been rising in
Auckland over the last few years, with values closer to around
$600 per sqm or more in the area.
A confidential purchaser has also secured an 8.51 hectare
site at 122 Ingham Road, Hamilton. The site has a 36,000
sqm industrial facility with a 20-year lease to the New
Zealand subsidiary of global packaging and paper company,
Visy Industries. While sale details are confidential, high-
profile industrial developments have sold for a yield of
between 4% and 5%.
Retail
Retail spending in the June quarter continued to rise
modestly. Electronic card transactions data from Statistics NZ
shows spending in core retail industries rose 0.7% from the
March 2019 quarter.
When compared across the previous four June quarters,
consumables and hospitality have increased solidly. Strong
sales growth in both the takeaway and restaurant/café
sectors were also recorded. According to the Restaurant
Association of New Zealand, seven new hospitality outlets
are opening across New Zealand daily.
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Source: StatsNZ, Colliers International Research
Auckland and Wellington CBD Office Vacancy Rate
Source: Colliers International Research
Source: Colliers International Research
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Electronic Card Transactions by Value
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Ne
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New Zealand Overall OfficeIndustrial Retail
Commercial Property Investor Confidence Survey
New Zealand Research Report | August 2019 | Colliers International ResearchNew Zealand Research Report | August 2019 | Colliers International Research
Source: Colliers International Research
*Combination of industrial office & warehouse at a ratio of 20:80.
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Annual Market Indicator Review – Q2 2019
Recent Commercial Property Sales
Alan McMahon
National Director
Strategic Advisory
David White
Director
Strategic Advisory
For more information contact:
Chris Dibble
Director
Research & Communications
Adrian Goh
Research Analyst
Anna Sizova
Research Analyst
Emily Duncan
Research Analyst
Disclaimer: Whilst all care has been taken to provide reasonably accurate information, Colliers International cannot guarantee the validity of all data and
information utilised in preparing this research. Accordingly Colliers International New Zealand Ltd, do not make any representation of warranty, expressed
or implied, as to the accuracy or completeness of the content contained herein and no legal liability is to be assumed or implied with respect thereto.
© All content is Copyright Colliers International New Zealand Ltd, Licensed REAA 2008 and may not be reproduced without expressed permission.
Chris Farhi
Director
Strategic Advisory
Caity Pask
Senior Analyst
Strategic Advisory
Vernon Sequeira
Analyst
Strategic Advisory
Colliers International
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151 Queen Street
Auckland
+64 9 358 1888
120 Wairau Valley Road, Wairau Valley
Auckland | $4,325,000 | 4.1%
Property Sector
Prime Rents
(% Change)
Prime Capital Values
(% Change)Vacancy Rate
12-Months to Jun-19 12-Months to Jun-19 2018 2019
Office Net Face Based on Net Face Overall (June)
Auckland CBD 1.5% 6.0% 6.2% 5.0%
Office Gross Face Based on Net Face Overall (June)
Wellington CBD 6.5% 4.3% 7.7% 5.9%
Office Net Face Based on Net Face Overall (March)
Auckland Metropolitan 2.6% 9.8% 6.0% 6.3%
Industrial* Net Face Based on Net Face Overall (February)
Auckland 3.8% 14.1% 2.2% 1.5%
Industrial* Gross Face Based on Net Face Overall (November)
Wellington 7.3% 10.9% 2.1% (2017) 1.5% (2018)
Industrial* Net Face Based on Net Face Overall (September)
Christchurch -0.8% 2.3% 1.9% (2016) N/A
Retail Net Face Based on Net Face Overall (June)
Auckland CBD 0.0% 0.0% 3.8% 5.7%
Retail Gross Face Based on Net Face Overall (June)
Wellington CBD 2.3% 3.5% 6.8% 4.2%
Corner of Wordsworth / Hawdon & Kingsley
Street, Sydenham
Christchurch | $2,615,000
758 Dominion Road, Mt Eden
Auckland | $1,227,000 | 5.8%