New Zealand seen as ‘ Switzerland of property’
Geographic isolation from world events, rich natural resources and a relatively stable geopolitical environment have meant that New Zealand is an attractive place to invest. Simon Felton
New Zealand’s isolation has become one of its biggest assets as offshore investors look to buy real estate in a stable economy i solated from tumultuous world events, says investment property specialist Simon Felton.
A Colliers International broker specialising in Auckland CBD real estate, hewas named the “Rising Star” at the 2017 REINZ Awards. He says prime CBD assets are strongly favoured by overseas buyers.
“Much of the offshore interest is from institutional investors who, globally, outnumber private buyers almost three- to- one. Among these institutional buyers, there is a big demand for prime Auckland CBD assets, specifically ‘ trophy’ properties, which has resulted in a significant shortage at the top end.
“As our market is still relatively small by international standards, the main problem we face is too few properties in a premium price- range for global institutions and funds to justify spending too much time looking for investments here.
“This has meant that most of the available properties in the high dollar range of $ 50m or more have achieved historically record yields and prices per metre.”
Felton points to recent transactions such as the sale of the NZI Centre at 1 Fanshawe St, which sold to a Singapore- based institutional inves- tor for $ 63m. The transaction, brokered by Colliers International’s Capital Markets team, was the largest sale of a leasehold property in New Zealand this year.
Felton has sold well over $ 100m of commercial real estate over the last two years, including two substantial inner city office towers. He completed a Bachelor of Property degree at the University of Auckland before travelling the world looking at different property markets, and was Colliers International’s “Rookie of the Year” in 2016.
He says the key driver of overseas interest in New Zealand property is the strength of the overall investment environment. “New Zealand has gained a reputation as the ‘ Switzerland of investment real estate’.
“Geographic isolation from world events, rich natural resources and a relatively stable geopolitical environment have meant that New Zealand is an attractive place to invest for the global market.
“North Korea, Trump and Brexit have loomed large in the headlines this year, New Zealand has been relatively insulated from the world’s turmoil. Even the Bay of Plenty floods, recovery from the Kaikoura earthquake and the most uncertain election in years haven’t managed to dent our stable economy.”
Felton says New Zealand has the strongest economic growth in the OECD, a very enviable position.
“Our driving factors include abundant natural resources, a strong tourism sector and we have enjoyed net positive migration for the last four years running — an indication we are globally desirable.
“The future is looking pretty good too. Strong population growth of 1m people ( 26 per cent) over the last two decades, has not only spurred growth in almost every industry. It also has the dual benefit of giving businesses more insulation in a possible downturn scenario.
“Our strong economy has been a major benefactor from the phenomenon of globalisation; the internet and speed of information flows mean that we are as interconnected as possible, while also maintaining our geographical separation — this particular facet cannot be overemphasised.”
Felton says the biggest speed bump for offshore institutional investors may be the proposal to tighten Overseas Investment Office regulations.
“However, these restrictions may end up serving to increase our global attractiveness.
“Unlike the past, where our geographical separation has resulted in the negatives of higher costs of imported goods, difficulty obtaining skilled workers and late adoption of major global break- throughs, I think the reverse is now true.
“Isolation has become one of our biggest assets.”