Time to sell your investment properties?
Real estate specialists CBRE NZ say it’s a good time for commercial property investors to think about whether they sell their properties.
Billions of dollars were available to buy large commercial properties but not enough vendors were willing to sell, its new report says.
CBRE’s New Zealand Market Liquidity research report talks about liquidity – the ability to buy and sell when needed – and says ‘‘timing can be everything’’ and can determine success or failure when entering or exiting a property or property market.
‘‘When an investor decides to exit a market, the primary influence of success is liquidity and the time to think about this is on the way in,’’ the report says.
CBRE said its 20 marketing campaigns over 21⁄2 years to the middle of this year offering $1.3 billion of large-scale commercial property attracted $8.2b of bids, with nearly $6.9b of investment money ‘‘unsatisfied’’.
‘‘The results of the analysis show
that willing purchasers of New Zealand assets exist in abundance, while a willing vendor is harder to find,’’ the report says.
CBRE NZ executive chairman Brent McGregor said the report explained the overall New Zealand environment was relatively good for trading properties if an owner needed to or wanted to sell.
When new investors came to New Zealand they often asked about liquidity and how straightforward it was if they wanted to sell.
Asked if vendors were holding off selling because it was difficult to find investments with a similar return, he said most vendors were happy with their assets. They did not buy with the intention of selling but to build an investment base, so there had to be a reason to sell.
‘‘Some of the private New Zealand owners had chosen to sell, to take some money off the table to sell some assets to offshore groups.’’
CBRE received on average more than six bids for every large-scale property it took to market with an average bid of $80 million, so there was a depth of demand for properties, driving prices higher.
There were many more buyers than sellers while prices had been rising continually since 2013.
McGregor said the number of properties for sale was about the same as last year and had been quite stable for the past few years.
‘‘I’m sure it [the report] will trigger some people to make that decision [to sell].
‘‘There’s every chance it will result in a few transactions that will start the thinking process anyway.’’
McGregor was not predicting a change. The strong depth of available capital and falling interest rates were the two main drivers of the market and there was no reduction in liquidity on the horizon.
McGregor said he had been first asked if the market had peaked in 2015 and he had been asked every year since and ‘‘I haven’t said yes yet’’.
The last decline – the GFC – was caused by a global shock where credit dried up. ‘‘At present we have a depth of credit, we have decreasing interest rates and high levels of capital so there’s no signs that we’re at the top of the market.
‘‘In the absence of another global situation or rapidly increasing interest rates, I can’t see a situation arising where things are going to face any rapid declines.’’