Second place: $214m
The annual roundup of the biggest commercial property deals was undoubtedly a one-horse race in 2018 – the massive
$635 million sale of the VXV portfolio of seven office buildings on Auckland’s waterfront won hands down.
It’s not the biggest property deal ever, agents say, pointing to Canadian pension plans in 2014 buying AMP Capital’s portfolio of properties for about $1 billion. But it’s a huge deal nonetheless.
This year was marked by big flows of foreign capital being invested in large buildings, with the VXV portfolio the standout deal and American investors featuring large in three of the top five office building transactions.
The portfolio was sold by 51 per cent owner Goodman Property Trust and Singaporean sovereign wealth fund GIC to funds of giant United States investor Blackstone, one of the world’s leading investment firms.
John Dakin, chief executive of Goodman (NZ), which manages Goodman Property Trust, said it was probably Blackstone’s first major purchase here.
The seven buildings include the head offices of companies such as Fonterra, Air New Zealand, Datacom, Bayleys, KPMG, Auckland Transport, HP and Microsoft.
The deal did not include the land on which the buildings stand, which is owned by Auckland investors.
The sale was part of Goodman’s strategy to shift away from office buildings and into industrial properties in Auckland, where it says there is an acute shortage. Coming in second in the commercial property stakes was the sale of the 30-storey QBE Centre building at 125 Queen St in Auckland, an extensively redeveloped commercial office tower including a three-level historical building.
It sold for $214m to a fund owned by global real estate investor Invesco, which is majority-owned by investors in the US, according to information from the Overseas Investment Office (OIO).
The seller of that building was Special Situations Assets, which is also majority-owned by US investors, according to the OIO decision. Approval was required because it was a transaction of more than $100m.
Third place: $197.5m
The third largest sale was the 12-storey building at 40-48 Willis St, sold by high-profile Wellington developer Ian Cassels through his company, The Wellington Company, for $197.5m.
It was sold to an investment syndicate represented by Queenstown law firm Mitchell Mackersy.
The deal is unconditional and expected to settle next March.
Cassels said he was putting more of his focus ‘‘on cracking the hard nut of affordable housing’’ in Wellington. It was the biggest price ever paid for an office building in the capital.
Fourth place: $181m
Fourth was the sale of a half-share in the ANZ Centre, in downtown Auckland, by New Zealand listed property company Precinct Properties for $181m to a fund controlled by Invesco.
Precinct sold the asset to free up capital and to concentrate energies on its huge $1 billion-plus Commercial Bay office, hotel and retail development on the Auckland waterfront and on redevelopment projects at Bowen Campus in Wellington.
Fifth place: $116m
The fifth largest deal was the sale by well-known Auckland developers Mansons TCLM of a new building at 96 St Georges Bay Rd in Parnell to property investors and managers Augusta Capital for $116m.
Augusta has syndicated the investment.
The sellers of the top five were three New Zealand companies, one US majority-owned firm and the Goodman-GIC partnership.
Four of the five properties were in Auckland and one was in Wellington.
Real estate services firm CBRE investment analyst Mark Maginness said some very largescale commercial properties came to market in 2018. Offshore investors were definitely more active this year than last.
CBRE calculated that $1.82b of overseas capital flowed into New Zealand in 2018 for commercial property transactions, $300m more than 2017 at $1.5b.
The big overseas buyers in 2018 were from the Americas, spending $1.03b in 2018 compared with $242m in 2017, CBRE said.
Money from Asia halved in 2018 for commercial property acquisitions to $381m, from $862m in 2017.
The Australians were also less active in the market in 2018, spending $224m compared with $372m the year before.
There was a bit more action from European buyers, who spent $140m this year compared with $31m the year before, CBRE data showed.
Maginness said Australians had been less active in the New Zealand commercial property market following the global financial crisis.
Asked why New Zealand investors were putting big properties up for sale, Maginness said owners had seen big prices being achieved over the past few years and were thinking it was time to sell out. ‘‘I guess they want to put some money under the bed for when things change.’’
Maginness said it was hard to predict when the strong commercial property run over the past four years would change. Interest rates were not forecast to rise until the end of 2019.
‘‘I can’t see anything that will cause a correction at the moment. There’s so much money coming from sovereign wealth funds, super funds and pension funds globally [that] they just have to put somewhere. Property’s an easy choice and it’s just been driving prices higher and higher and these buyers are becoming more global,’’ he said.
New overseas investors such as Invesco were popping up here.
Colliers International research and communications director Chris Dibble said the continuation of low interest rates worldwide was a big driver of the commercial property market. ‘‘That really has enticed the commercial property market to continue being really quite bullish.’’
The New Zealand market last year slowed during the general election but bounced back in 2018 supported by low interest rates.
International investors had been playing a growing part in the market since 2014, deepening the purchasing pool.
‘‘With regard to the offshore market, a significant weight of capital, superannuation funds, and sovereign funds and insurance companies from all over the world are really trying to secure high-yielding assets.
‘‘At the moment New Zealand has a lot of the positive fundamentals that support the yield environment,’’ Dibble said.
The big listed property companies in New Zealand had been selling because they had new developments to fund. After Goodman Property Trust sold the VXV portfolio it bought the large Foodstuffs distribution centre in Mount Roskill for $93m for future development, the largest single industrial sale this year.