Proactive investors go off-market
CBRE has concluded the sale of three largescale commercial property assets in Christchurch, as high demand from investors nationwide continues to come up against a shortage of stock for sale.
The assets transacted, which together total $65m in value, are the Kathmandu Building on Tuam Street in the CBD, The Landing commercial precinct in the Wigram Skies subdivision and a portfolio of three childcare centres.
The purchasers were an Auckland-based property fund manager, a Tauranga-based high net worth investor and a local property syndicator – buyer groups which are currently all highly active in the market at the moment.
Tim Rookes, managing director of CBRE’s Christchurch office, said there is still extremely high demand for quality commercial property investment stock among buyers, but not enough product for sale to satisfy demand.
‘‘We have a significant oversupply of capital searching for investment property in Christchurch meeting a scarcity of suitable assets. This has meant that following several large commercial property sales in 2020, this year has been characterised by few transactions of scale, although demand for quality investments remains very high.’’
The Kathmandu building and childcare portfolio were both sold off-market, demonstrating how the scarcity of on-market stock is driving increased off-market transactional activity as investors aggressively pursue quality product through unsolicited offers, said Rookes.
‘‘This is further evidence of the pent-up demand for prime commercial property assets in Christchurch.
‘‘Purchasers are having to be a lot more proactive in their search for acquisitions, in the hope that off-market approaches to property owners will give them an edge over other buyers in an extremely competitive market.’’
The Kathmandu Building at 229 Tuam Street, which was constructed in 2016, was sold by a property syndicator to property fund manager Oyster Group. It is Oyster’s first purchase in post-earthquake Christchurch.
‘‘The sale of the Kathmandu building to an investment group which has not previously been actively present in Christchurch demonstrates the weight of investment demand which is continuing to drive the local commercial property market,’’ Rookes said.
The childcare portfolio, which consists of three established centres, was sold to a local property syndicator, highlighting the increasing demand for non-traditional asset types, said CBRE broker Paul Brown, who negotiated the deal.
In Wigram, the newly-built mixed-use development known as The Landing was sold via an on-market campaign by Nga¯ i Tahu Property to a private North Island-based investor.
The 12,808 sqm property, on two titles, is the central retail and community hub for the premium Wigram Skies residential community.
Cameron Darby, senior broker at CBRE Christchurch, said that despite the retail sector’s post-Covid challenges the transaction demonstrates the significant appetite among investors for well-established, fully tenanted retail centres in a market where quality real estate investments are in short supply.
With the continued scarcity of suitable purchasing opportunities nationally, investors are chasing Christchurch assets with enthusiasm, where much of the CBD office and prime industrial building stock is new and of high-quality construction, with attractive long lease terms, said Rookes.
‘‘It remains to be seen how investors will incorporate the emerging inflationary pressure and interest rate outlook in satisfying their investment strategies.’’