Opinion piece by NAI Harcourts General Manager Greg Clarke, 9 August 2016
Just as low stock levels are driving the residential property market, commercial real estate is being affected by low listing levels.
Around the country, but particularly in Auckland, there is a reluctance to sell commercial property.
One reason is interest rates are extremely low, meaning putting money in the bank after a sale has become an unattractive proposition.
And when listings start to drop off, existing investments tend to become tightly held. And so it goes.
So what are the options for an investor who is struggling to find an appropriate commercial property within Auckland?
One move is to look to the regions.
Just as residential buyers are looking further and further outside of Auckland, there are opportunities for commercial investors in the provinces.
You will not necessarily get the same elevated capital gains outside of the City of Sails, however generally the yields are higher and good returns are possible from tenanted investments.
Commercial investors can be hesitant about purchasing in an area they are unfamiliar with, ie, somewhere they do not live. However, with time and comprehensive due diligence investors will find themselves good long term investments and solid incomes.
One of the strengths of NAI Harcourts is that we have commercial specialists in locations around the entire the country. A client can talk to an NAI Harcourts sales consultant based anywhere, and they will be able to brief you on opportunities that exist elsewhere in New Zealand. We have a very strong internal network and our team refer clients and properties regularly.
Another option for existing Auckland commercial investors is to sell up, make a good – or outstanding - capital gain and buy in the regions to benefit from high yields and consistent annual income.
If you are determined and creative, there are profitable investments to be had, even in this low supply environment.
Auckland’s revised Unitary Plan has yet to be adopted, but some commentators are already saying many new commercial zones are not located near to where workers will live, or close to existing public transport links.
I don’t want to make criticisms until all amendments have been finalised.
What I will say is that commercial real estate in Auckland is going to benefit hugely from the population growth forecast for the city. Where the people come, so come the jobs, innovation, economic growth and opportunity. It’s an exciting time and we should all be optimistic about the future of our Auckland City.