Real estate market rebuffs virus fears
More than two thirds of the commercial and industrial properties for sale in Bayleys’ first Total Property portfolio auction in Auckland last week found buyers, despite the upheaval of Covid-19.
A total of 17 out of 25 offerings in Auckland on Wednesday, March 11, sold for just over $27m, with four out of five properties selling under the hammer in Wellington the next day.
“We went into the auction with a certain amount of trepidation, given the turmoil in equity and bond markets,” said the company’s Auckland commercial director Lloyd Budd.
“But we ended up with a great result for our vendors, which once again reinforced the attraction for investors of bricks and mortar as a defensive asset class in turbulent times.
Budd said six of 11 fully leased tenanted properties sold at yields of less than 5 per cent. “This was a clear indication that the market had already factored in further interest rate drops, confirmed by the Reserve Bank’s three-quarters of a percentage point cut to the OCR (Official Cash Rate) on Monday.”
The lowest yield was 3.93 per cent for two adjoining industrial units at 36 Arrenway Dr, Albany. The units, built in 2004, were sold by Laurie Burt and Matt Mimmack as one lot for $3.26m at $4598 per sq m on their combined floor area of 709sq m.
Burt said the offering, adjacent to Interplex business park, was a standalone development with its own underlying land holding. One of the units also has a rent increase in May, which will increase the net income return to 3.99 per cent.
Attracting the most bids at the Auckland auction was a small retail unit at 254 Lincoln Rd, Henderson. The 96sq m shop, which has a threeyear lease from February 2019 to a vaping retailer and comes with one car park plus a share of common parking, sold for $522,000 at 4.98 per cent yield through Matt Lee and James Chan.
Part of a fully leased nine-unit retail complex with frontage on to Lincoln Rd, close to the corner with Universal Dr, the property was declared on the market at $400,000, meaning its reserve price had been met. Over
80 further bids followed, many $1000 increases, which pushed the final price up a further $122,000.
Three units in a new commercial development at 509-517 Ellerslie Panmure Highway, Mt Wellington, marketed by Tony Chaudhary, Amy Weng and Janak Darji, also sold at yields of less than 5 per cent.
A 240sq m unit occupied by Ray White real estate on a 12-year lease and Physio Connect on an eight-year term, sold for $2.675m at a 4.7 per cent yield, while a 251sq m unit with an eight-year lease to a caf sold for $2.66m at a 4.95 per cent yield.
A 253sq m unit occupied by fitness chain Orangetheory on a 10-year lease sold for $1.965m at a 5.75 per cent yield. Chaudhary says the units are part of a recentl development by Argyle Estates Ltd, anchored by a McDonalds restaurant, on a corner site at the intersection with Mt Wellington Highway.
Some of the other fully leased investment properties to sell were:
A 246 sq m single-level building housing a laundromat on a 429sq m site at 233 Taniwha St, Glen Innes, marketed by James Were and Phil Haydock, sold for $1.457m at a 4.8 per cent yield.
A 178sq m childcare centre on a
716sq m site at 21 Park Hill Rd, Birkenhead, sold for $1.968m at a 4.86 per cent yield by Jarrod Qin, Michael Nees and Nicolas Ching. Licensed for 35 children, it has a new 15-year lease.