While sentiment and prices for Hawke's Bay commercial property are barely increasing, cheque books are being used decisively.
Colliers International's latest quarterly Hawke's Bay commercial property investor confidence survey shows a slight increase in sentiment, with overall confidence up 3 per cent in the past three months.
But Colliers director Simon Tremain cites six significant local properties that have sold in the past six months, some having been on the market for up to five years, as proof that investors have woken from a slumber. They are:
Thirteen hectares of industrial-zoned land with holding income from vineyard plantings at 1452 Omahu Rd, Hastings, sold last month for $1.2million.
A fully tenanted 10,800sq m industrial property at 2 Riddell St, Ahuriri, Napier, sold last month for $3.1million.
The Power Building at 301 Heretaunga St East, Hastings, which stands on a 6146sq m corner property, sold last month for a confidential sum.
A fully tenanted industrial facility at 301 Jervois St, Hastings, sold in February for $840,000.
A 3000sq m waterfront site with holding income on West and Nelson Quays, Ahuriri, Napier sold in September 2011 for $3.6million.
The Beachfront and Shoreline motels on Napier's Marine Parade have recently sold for a confidential sum.
"With investor sentiment improving nationally, this is flowing into regional markets," Mr Tremain said.
"We're noticing investors beginning to buy properties in significant locations that have been on the market for a considerable time, indicating that people are willing to build up their holdings in commercial property again."
All centres surveyed this quarter showed an increase in confidence compared to last quarter except Dunedin, which was down by 5 per cent.
Overall investor confidence in the North Island is weaker than the South Island, with confidence levels recorded at 10 per cent and 32 per cent respectively. The much higher South Island confidence is due to positive results in Christchurch (again the nation's most optimistic city at 40 per cent positive) and Queenstown, at 26 per cent. Christchurch's optimism has been attributed to most respondents believing things cannot get much worse in the Garden City.
Queenstown is consistently one of the nation's most positive centres, owing to good tourist numbers and a downtown area where property values have recovered strongly. However, this quarter Auckland overtook Queenstown, with a net 36 per cent optimism.
Market optimism in Auckland during the past three months has leapt by 23 per cent to 36 per cent in the March 2012 quarter. That has been attributed to improved business confidence in the city.
By sector in all of the main centres, industrial investors continue to be the most optimistic, with Christchurch industrial investors the most bullish at 53 per cent with Auckland next at 51 per cent. Wellington office investors are the most pessimistic with confidence at -21 per cent.
The survey was compiled from 2340 responses.
Hawke's Bay property analyst Pat Turley said the forecast for the national economy improving, continuing favourable finance costs plus possibly some Canterbury insurance funds migration would, during late 2012 into 2013, most likely bolster improving commercial property market confidence nationally.
"Commercial property with good attributes remain keenly contested nationally and locally at quite firm yields around seven to eight per cent and lower," he said.
"The opportunity for well-considered, counter-cyclical property investment is likely to continue to feature over 2012. We currently expect diminishing counter-cyclical opportunities into 2013, as market conditions improvement perhaps becomes more obvious. We predict a strong commercial property market uptake in Hawke's Bay as the recovery cycle momentum gathers. There will ultimately be good recovery as sure as night follows day. The matter of timings is less certain.
"In the meantime commercial and industrial property rental values and particularly land values, continue to languish or decline.
"Land values are hard hit in what is a low development demand market. The valuation adjustment process ultimately has the effect of reducing forward values uncertainty.
"Pre mid-1970s and older commercial buildings with earthquake performance status uncertainties and possible future strengthening requirements, is causing some buyer indecision.
"This building status issue is causing leasing and investment demand competitive shift and properties re-ranking locally and nationally. This can be expected to be an ongoing trend for years.
"There is a flurry of proposed tenancy movement happening in Hawke's Bay spurred by tenant preference for highly ranked earthquake performance status buildings. Lease renewals by tenants are nowadays a bit less certain."
Alan McMahon, national director of research and consulting at Colliers, said the improvement in nationwide commercial property market confidence could be attributed to a general feeling among market participants that economic growth was getting nearer, with more positive economic news being released.
"The expectation that interest rates will stay low for the rest of the year is also encouraging greater optimism, as is the fact that the worst of corporate redundancies look to be behind us," he said.