Cnr Victoria & London Streets

Investors should be looking south of Auckland for commercial investments if they want to achieve yields above 7%, even as high as 10%, says Managing Director of NAI Harcourts Hamilton Commercial Mike Neale.

Mr Neale says Hamilton sits around 12-18 months behind Auckland in property market trends and the Waikato has not yet reached its heightened prices. Most yields are at around 7.5 – 9% he says.

“At the moment we have some of the best investment stock we have had in the last 5 years, in terms of the quality of the buildings, tenants and length of leases. If you are looking for an investment and the numbers are just not making sense in Auckland, look at what we have to offer in Hamilton.”

He cites four properties up for sale by auction on 19 March as good examples of the value to be had in the Waikato.

404 Anglesea Street in Hamilton’s CBD is currently tenanted by Canon New Zealand Limited. The six year lease returns $65,000 per annum plus GST and outgoings, with two further rights of renewal of three years each expiring on 30 April 2025.

The building is situated on the eastern side of Anglesea Street, which is an inner city by-pass route. With an excellent profile and over 13,000 vehicles passing by daily, Mr Neale says properties with these qualities are rarely available and would ideally suit an astute long term investor or family trust.

Development in the immediate vicinity is mixed, being a combination of light commercial, retail and service uses – including professional offices, the Hamilton Transport Centre, AMI Insurance, as well as Casabella Lane and Health 2000. The land area is 690sqm with 200sqm of offices and parking for up to 15 cars.

Another high profile location up for auction is on the corner of Victoria and London Streets in the CBD. Popular Columbus Coffee is the tenant and there are strong lease covenants in place. The new six year lease returns $53,746 per annum plus GST and outgoings, with built in annual rental growth of 3% per annum. There are two further rights of renewal for six years each.

Fully redeveloped in 2012 with seismic strengthening completed and a new fit-out, this property’s floor area is 179sqm. The high profile corner location sits immediately below Quest Service Apartments and in the vicinity are quality high-rise office towers with corporates such as ACC, Genesis Energy and Fonterra.

Further along Victoria Street on Hamilton’s “golden mile” sits freehold main street investment 801 Victoria Street.

With a floor area of approximately 125sqm, this investment is currently returning $25,675 per annum plus GST and outgoings. The long established tenant of 16 years, Studio 801 Tattoo & Body Piercing, has a six year lease from March 2014 with rights of renewal.

The area is comprised of a mix of retail, office and hospitality, with near neighbours including the Victoria Central Medical Centre, the new multi-million dollar swimming pool complex, Aesthete Gallery, Yellow Pages and the flagship Les Mills complex.

On the outskirts of the Hamilton CBD in the popular Frankton retail area are two units being offered for sale as one parcel. Units 5&6, 235 Commerce Street are currently returning $28,000 per annum plus GST and outgoings.

The two units are located at the western end of Commerce Street near the Frankton Hotel, Forlongs, Kiwi Bank/ NZ Post and Village Organics. They also benefit from the nearby Frankton markets held each Saturday.

Mr Neale says this is an ideal property for first time commercial investors. Unit 5 has a floor area of 60sqm and an income of $12,000 per annum plus GST and outgoings. The lease term is four years (commenced 1 June 2012) with two further terms of three years each.

Unit 6 covers 115sqm and returns $16,000 per annum plus GST and outgoings. It has the same lease terms as Unit 5, with both tenanted by Time After Time $10 Haircuts Limited. Tenants have use of a car park each, situated at the rear of the building.

Mr Neale says each of the four investments is located in an excellent position, with established or national tenants and lies within a good price bracket.

“Hamilton doesn’t suffer from the same peaks and troughs as Auckland, with a consistency to the market that allows for stable and steady growth. As far as I’m concerned there should be busloads coming down from Auckland to look at these opportunities,” Mr Neale says.

NAI Harcourts General Manager Michael Grainger says there are good opportunities in the Waikato.

“The Auckland market is competitive and investors are prepared to pay more due to limited supply. The Christchurch situation has also had an impact, with some investors pulling their money out of the city post the earthquake and reinvesting in Auckland where there is deemed to be stability – another factor affecting yields.”

All three investments go to auction at 11am, 19 March at the NAI Harcourts Auction Room, Corner Te Rapa & Forest Lake Roads, Hamilton.