Look to the regions when stock is low

11:17 AM Wednesday August 31, 2016 True Commercial

This multi-tenanted regional office property at 1081 Hinemoa St, Rotorua, was sold by NAI Harcourts for a yield of 7.55 per cent.

Investors struggling to find an appropriate commercial property within Auckland should look to the regions, says Greg Clarke, NAI Harcourts general manager.

“Just as low stock levels are driving the residential property market, commercial real estate is being affected by low listing levels,” Clarke says.

“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.

“However, just as residential buyers are looking further and further outside of Auckland, so there are opportunities for commercial investors in the provinces.”

Clarke says commercial property investors won’t necessarily receive 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.”  

He says commercial investors can be hesitant about purchasing in an area they are unfamiliar with or where they don’t live. “However, with time and comprehensive due diligence investors will find themselves good long term investments and solid incomes.

“Another option for existing Auckland commercial investors is to sell up, making a good – or outstanding – capital gain and buy in the regions to benefit from high yields and consistent annual income.

“If investors are determined and creative, there are profitable investments to be had, even in this low supply environment,” Clarke says. 

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Greg Clarke, NAI Harcourts general manager.