Banks’ appeal rises with market doubt

Investors are increasingly on the lookout for commercial properties anchored by major banks as uncertainty creeps into the market, according to Bayleys Auckland commercial and industrial director Lloyd Budd.

He said banks were a ‘‘really attractive’’ tenant as investors shifted towards buying quality.

‘‘People want surety of income and that’s what the biggest attraction is about real estate at the moment.’’

At a recent auction, one bank property attracted 377 bids from seven different bidders, Budd said. The auction proceedings lasted 40 minutes.

‘‘This shows that there is real competition out there for these assets and you just can’t seem to find a better tenant than a bank,’’ Budd said.

Three years ago, buyers might not have differentiated between a bank or a pharmacy as a tenant.

‘‘[But] there is an element of uncertainty in the market, and so people are therefore now looking for those what traditionally we consider to be the absolute blue chip. People are saying, ‘Hold on, we are going to pay attention to that, because there’s probably a little bit more risk to consider moving forward.’ ’’

Properties tenanted by banks were selling for up to 20 per cent more than those with other tenants, Budd said.

‘‘I know this is cliche, but real estate has always been location, location, location, so as soon as there is uncertainty in the market, people go back to the fundamentals and that is banks. Banks are always in fantastic locations.’’

Following the sale of two properties tenanted by banks earlier this year, Bayleys had three more come onto the market.

In Feilding, Manawatu, the Heartland Bank branch on Fergusson St is up for grabs, as is Bank of New Zealand’s Levin branch on Oxford St.

In addition, the land and buildings housing a Westpac branch are up for auction on Carters Rd in Amberley.

A Bayleys spokesman said banks were renowned for being cornerstone tenants in regional towns and provincial cities throughout the country.