With all-time low levels of quality investment stock available, the competition for well-leased industrial assets is hot.
This was clear at Colliers’ most prominent auction day in Christchurch for many years where $23.62 million of property sold under the hammer with just shy of 100 bids on 5 August.
“The confidence in the market has never been better with six out of six properties sold on the day, all with competitive bidding,” says Christian Kellar, Industrial Broker at Colliers in Christchurch.
“The weight of the capital in the market is a sign that if ever there was a time to sell, it’s now.”
Kellar’s colleague Oliver Salt estimates there was $50 million of unsatisfied investor capital from the auction day still looking for a home.
“Two of the properties were bought by Auckland investors, indicating the continuing appetite they have for the Christchurch market and the other three were local investors,” Salt says.
The jewel in the crown was the sale of a trophy asset in Buchanans Road, Hornby to an Auckland investor for $11 million, representing a 4.82 per cent yield. Leased to an NZX-listed subsidiary, the high-profile property was tipped to attract widespread national interest.
Kellar says the property has excellent investment fundamentals, making it a rare A-grade investment opportunity.
“The competitive bidding on that property highlights the lack of available investments of this calibre.”
Another Hornby property at 11 Establishment Drive, developed and owned by the same private family, fetched $4.140 million and was bought by a local family trust.
“What was particularly interesting about this sale is that the property was a brand new vacant industrial asset but was competed for by investors on auction day. Usually, they look for tenanted assets, but it was clear they were keen to be in the market and prepared to take a risk on vacancy,” Salt says.
The suburb of Wigram was also in hot demand. A post-earthquake 750sq m building on 4,177sq m of land at 6 Timothy Place netted $2.805 million while a conventional high stud building at 63 Hammersmith Drive attracted $2.585 million – with up to an 18-month lease in place. Both were sold to local buyers, while an Auckland bidder won the 2,530sq m Z Energy site at 208-210 Harewood Rd in Bishopdale for $2.6 million.
Interest was also lively in the only other property, a character ‘as is, where is’ building at 141 High Street that sold to a local buyer for $490,000.