NZ set to gain from Trump, Brexit fears

The real estate market will benefit from uncertainty in Britain and the United States, and the continued influx of overseas investors, according to CBRE.

CBRE’s head of research for the Asia-Pacific region, Henry Chin, told a market outlook meeting in Auckland that the Asia-Pacific real estate market was becoming more mature, more liquid, and more international.

‘‘I feel very positive about the Pacific, with uncertainty from Brexit and what the US Government is trying to do is a big uncertainty. I think that’s a big plus for our region, which is quite stable.’’

Chin said the hot topic for the New Zealand real estate industry was the growing number of overseas investors in the local market.

He said if anything people were unaware of the extent of overseas investment here.

Fidato Advisory director Ed Schuck works with the New Zealand Private Equity and Venture Association, and said that all the major private equity funds he was aware of steered clear of property investments.

‘‘They tend to focus on businesses that sell products or services that are scalable.’’

Chin said Chinese, Korean and Japanese investors all showed a stronger desire to put more money into global real estate and there was ‘‘no sign of slowing down’’.

CBRE found there was a growing appetite among Korean investors for investing in other countries. Chin said this was part of a growing need for people to diversify their assets.

In 2016 CBRE’s Outbound Investment Intentions Survey found 80 per cent of respondents wanted to invest overseas compared with 69 per cent in 2015.

Chin said that, based on the survey, the biggest qualm investors had was that they wanted to spend more in New Zealand than the country could offer.

‘‘The average lot size that they want to spend is US$1 billion [NZ$1.43b]. How many buildings can meet that requirement? That’s become a major issue.’’

Chin said the reason there were not more investors coming into the market was also because of the gap between demand and supply in Auckland.

A big issue was the mismatch between the quality of the buildings available and what investors wanted, he said. Investors wanted A-grade buildings that provide a stable income.

CBRE said leasing risk would increase for B-grade properties because occupiers have shown a preference for space in the highest quality building available.

Retailers are expected to be more disciplined about store expansion, with more of the growth coming from e-commerce sales than in-store sales.

The report also found a growing trend of landlords ‘‘placemaking’’ to attract tenants.

For retirement homes, placemaking often means a close proximity to hospitals and golf courses, while for office space millennials are driving demand for more green spaces, rest areas and sport and exercise facilities.

Chin said shopping centres in Asia do well at placemaking by adding ‘‘retailtainment’’ zones.

This includes movie theatres, gaming centres and indoor sports activities, as well as casual dining and cafes in retail areas.

AMP Capital shopping centres managing director Mark Kirkland said 2017 would be the year of ‘‘experiences in retail’’.

‘‘Creating experiences for our customers is at the heart of AMP Capital’s strategy and there is much we can learn from [the] AsiaPacific, where there are many examples of centres that create a whole experience around the retail offering.’’

Kirkland said the influx of cruise ships at Port Tauranga and more tourists attending festivals in New Plymouth have put a greater emphasis on placemaking for tourists, and extending trading hours at its shopping centres.

‘‘I think [overseas uncertainty is] a big plus for our region, which is quite stable.’’ Henry Chin, CBRE