South Island seen as main land of opportunities
The commercial and industrial property market in the South Island is somewhat segmented – both geographically and agency-wise.
Bayleys has acted on this by recently appointing William Wallace to the new role of general manager South Island commercial and industrial, and Bayleys Canterbury acquiring longstanding Christchurch-based commercial and industrial agency, M B Cook Ltd.
With Bayleys having key clients in the North Island looking for opportunities and assistance in the South Island, Christchurch-based Wallace is focusing on solidifying Bayleys’ business throughout the mainland.
In the latest edition of Bayleys Total Property, Wallace said there’s a significant weight of capital seeking investment opportunities in the South Island.
“There’s a recognised shortage of new land coming on stream for commercial and industrial development in some core South Island regional centres – sometimes down to geographic constraints, other times reflecting a lag between market demand and council planning frameworks. This puts the focus on projects already consented and under way, or opens up conversations around where the next big opportunities lie.
“My feeling is the wider Otago region is undervalued and ripe for growth. But given the scope of projects under way right around the South Island, it’s clear that there will be compelling opportunity for private investors at every juncture.”
Wallace said investment by private, iwi and public entities signals confidence to the wider market with each region offering compelling underlying fundamentals.
“Commercial and industrial property activity has intensified in the Nelson-Tasman region, on the back of a strong regional economy and the lifestyle benefits the area offers,” he said.
“We’re seeing more-intensified residential development with scale, there’s an identified shortage of quality CBD office stock, large-format retail precincts have traction in the suburbs, and Richmond is undergoing huge transformation with residential, commercial and industrial development burgeoning.”
With around 70 per cent of Marlborough’s regional economy linked to the wine sector and huge global demand for New Zealand wine, there’s an air of real positivity in Blenheim with significant construction activity.
“The Ministry of Education is repositioning three Marlborough schools for efficiencies and to cater to growth, and a new $20 million district library/art gallery is under construction with a boost from the Provincial Growth Fund. Summerset is building a $125 million retirement village, several industrial developments with scale are progressing, and council is addressing the need for higher intensification residential options.”
Christchurch is thriving postquakes with infrastructural investment providing confidence and opportunity for private commercial and industrial investment, underscored by the appeal and affordability of housing in the region.
“The list of civic, recreational, educational and healthcare projects under way is extensive and more than $2 billion of new housing was approved in the last year,” he said.
“Plus, there are 247 new infrastructure projects covering water, transport and community facilities under way, while roading upgrades have streamlined arterial across the city and along strategic corridors.
“The biggest pinch point is a shortage of industrial land to absorb demand from large-scale occupiers, with existing and planned developments by private developers and iwi entity Ngai Tahu Property largely at capacity.”
Identifying the wider Otago region as a potential growth node, Wallace acknowledged Queenstown will face challenges as borders fully reopen, but there is evidence of considerable investment in the town indicating developers are confident in its future.
The Wanaka property market looks set for transformation with council projecting population growth from 8423 to 15,200 permanent residents by 2050, an 80 per cent increase.
As for Dunedin, retail dynamics in the CBD’s core are shaking out as council undertakes a $28 million upgrade. Plans for a world-leading health and education precinct centred around a $1.47 billion new hospital are touted as a transformational project.
“Construction sector hub Workforce Central Dunedin recently stated there's sufficient infrastructure work happening in Dunedin to sustain a boosted skilled construction labour force for at least the next 15 years,” Wallace noted.