Big deals on the cards
Investors moving away from residential property are expected to bring a bump to commercial property in 2019.
The flow of investment funds into commercial property was likely to gather even more momentum in 2019, Bayleys managing director Mike Bayley said.
This would be driven by investors diversifying out of the residential market, particularly in Auckland where the housing market was likely to remain fairly flat for the next few years. At the top end of the commercial property market, the big influx of foreign capital in 2018 was probably just the tip of the iceberg.
‘‘When the world’s largest real estate private equity investment firm, Blackstone Group, outlays
$636 million to acquire a portfolio of office buildings in the Viaduct, (the VXV portfolio of seven office buildings), being managed by Bayleys Property Services, the rest of the globe takes notice – and generally follows suit. Expect more big investments from the likes of Blackstone, Invesco and S C Capital in 2019,’’ Bayley said.
Likewise, real estate services firm Colliers International predicts continuing strong overseas interest in New Zealand commercial buildings.
It expected the big new entrants in
2018, like Blackstone and Invesco, to face stiff competition from more new offshore investors pursuing high quality properties.
It is forecasting a great year for hotels with surging tourist numbers.
It expected to see more hotels changing hands in 2019 as property owners decided to sell after five years of strong trading and buoyant tourism forecasts. More hotel developments would be announced particularly for tourism hot spots like Queenstown and Auckland.
A new wave of industrial development was on the cards in 2019 where developers went ahead without having committed tenants, driven by high demand.
Colliers research and communications director Chris Dibble said more companies and investment vehicles and funds would be getting into residential property developments in 2019.
Their investments would be based on changing attitudes to renting by a new generation.
The large scale developments, led by apartment developers, would offer long-term rentals and be similar to developments overseas.
Dibble said property syndicators were also expected to enter this market buying apartment developments which were leased to long term tenants and offering shares in the developments to small investors.
‘‘I think what’s exciting about 2019 is that New Zealand is established as a global investment destination,’’ real estate services firm CBRE’s executive chairman, Brent McGregor, said.
CBRE was also getting inquiries from different types of overseas investors interested in buying hotels, student accommodation and parking buildings rather than the traditional office, retail and industrial commercial property.
Properties for sale and lease back would feature in the first half of 2019 as well.
CBRE had been appointed to market the sale and lease back of a Waitemata District Health Board office property in Takapuna and an Auckland Council sale and lease back property in the Victoria Quarter.
He said changes in the property market were probably dependent on interest rates.