KEY POINTS:
Multimillion-dollar Auckland investment property deals have come to a crashing halt.
In the most dramatic sign yet of how the credit crunch is walloping real estate, a study just out showed the value of commercial property sales sank 87 per cent in Auckland this year compared to last year.
Zoltan Moricz of property consultancy and agency CB Richard Ellis in Auckland revealed the drop in the volume and value of deals and said agents were not having much fun.
Last year, $2.7 billion worth of real estate was sold. But in the 10 months to October, just $340 million was sold.
Moricz studied $5 million-plus deals on commercial, industrial, retail, vacant land, accommodation and retirement properties.
Just 33 Auckland properties went for $5 million-plus this year compared to 118 $5 million-plus deals at this time last year.
"Last year recorded the highest total sales volume in a calendar year and this followed the trend of strong annual sales volumes in the previous three years during which annual sales have totalled around $2 billion.
"The 2007 sales volume was boosted to $2.7 billion by the $368 million sale of Stockland Group's half share in Botany Town Centre, Manukau Supa Centre and Lynmall to AMP Property Portfolio," his report said.
Last year's sale of the 5.2ha Lion Breweries Site on Khyber Pass Rd in Newmarket, bought by AMP for $162 million, was another big deal, Moricz noted.
"The lack of very large-value transactions to date this year has contributed to the low overall volume of sales. There have been no sales of properties over $40 million."
The largest transaction this year has been 49 Symonds St which was sold by CBRE in May for $35.5 million.
The 12-level B grade office block was purchased from GE Finance by a private German investor.
The only other significant sale of the year was the Q&V Building on the corner of Queen and Victoria Sts for $33 million in April, sold to a wealthy Auckland investor by MCS Property, part of the failed Centro Group.
The most active buyers were private investors but government, listed property trusts and other managed funds also bought.
"Private purchasers have amounted to nearly two-thirds of the total sales. This is a greater proportion than usual as over the last five years private purchasers on average made up around 50 per cent of the total sales volume," Moricz wrote.
Half the sellers were also private investors but the other half was split between listed property trusts, managed funds, corporations and mortgagees in possession. "Over the last two years there has been an increase in the proportion of sales from listed property trusts and this year nearly a quarter of
the sales have been sold by listed property trusts.
"However due to the low volume of sales this has been heavily influenced by the $33 million sale of the Q&V building. Mortgagee in possession is a recent feature and is a category whose size over the next year will have an increasing bearing on overall market trends."
He expects this year to be the worst in 10 years in Auckland. Mortgagee sales have only played a small role so far, although a number of vendors have been highly motivated in quitting stock. He expects volumes to increase next year.
"Unfortunately this view is driven by the likely deterioration in market fundamentals resulting in a greater volume of distressed property entering the market as we reach the trough of the economic and financial sector downturn."
