Industrial property stars in Christchurch
Industrial property is the ‘unsung hero’ of the Christchurch market.
While the Christchurch central city rebuild has occupied centre stage in the news media the city’s industrial property sector has been the unsung hero of the market, says Ben Dwan, head of industrial sales and leasing for Colliers International in Christchurch.
Dwan predicts that considerable unsatisfied demand will further fuel the sector’s already stellar performance.
He says local industrial settled sales topped $226 million last year including 21 sales of $2 million and over with an aggregated value of $101,825,000.
A total of 222 industrial settled sales valued at $2 million and under had an aggregated value of $124.2 million.
“As more data on settled sales becomes available over the next couple of months, total sales for Christchurch will rise further, nearing $300 million,” Dwan says.
“There is enormous interest in the Christchurch industrial sector. Cashed up investors are holding onto what they have because it’s so hard to replace and are hungry for more high calibre properties. Many of our investors are looking for passive investments, properties that are 100 per cent of New Building Standard [NBS] or buildings where they can add value.
“We believe demand for new, high quality investment property is unlikely to be satisfied in the near future and we expect to see continued pressure on investment yields in the industrial sector.”
Dwan says strong prices realised for two high profile industrial properties in the city highlight the strength of the sector.
A Big Chill outlet in the same industrial park sold for $7.1 million.
Leading industrial investor Goodman Property Trust sold two modern and well-located local assets: Placemakers and Big Chill at the Glassworks Industry Park on Shands Road, in the heart of Hornby. Placemakers sold for $7.2 million representing a 6.5 per cent yield – the lowest yield for an industrial property since the Canterbury earthquakes while Big Chill sold for $7.1 million for a 7.1 per cent yield.
Meanwhile, commercial investment yields are at record low levels reflecting the current economic climate of soft interest rates, high liquidity – some resulting from earthquake insurance payouts - and an underlying desire for investment in real property. The average property value of new city buildings has at least doubled that of pre-earthquake values, prompting landlords to seek advice on the complexities of the new building regime including health and safety liabilities, compliance issues, and sometimes complicated leases.
An emerging trend in the investment arena is the increasing crossover between the commercial and rural sectors, which has prompted Colliers to launch an agribusiness division in Canterbury.
Shane O’Brien, national director of Colliers Rural and Agribusiness, says there have always been strong capital links between rural and commercial markets in Canterbury. “While this continues there is an increasing demand from traditional commercially-focused investors looking to explore rural opportunities,” O’Brien says.
This Placemakers outlet in the Glassworks Industry Park on Shands Road, Hornby sold for $7.2 million.
“Our biggest challenge is securing rural and agribusiness assets to meet demand from local buyers and international funds that want to invest in New Zealand farming as part of the global trend to secure food production for emerging Asian economies.
“New Zealand has an excellent international reputation for food production, we have world class infrastructure to support on-going investment and we’re close to the burgeoning markets of Asia and India. On top of thiswe are stillconsidered one of the safest economies in the world in which to conduct business.”