Commercial building sales good

The former Bank of New South Wales building on the corner of Heretaunga Street West and Market Street. One of the region's commercial properties up for sale.

COMMERCIAL investors are increasingly targeting Hawke's Bay as they pull out of the Auckland residential market - resulting in a end-of-year flurry of action for real estate agents here.

Estate agent Simon Tremain said following the result of the General Election commercial property market had been very active, with a marked increase in out-of-town investors.

"For our commercial team - the Colliers Hawke's Bay commercial team, the back end of this year has been the most active I have seen the commercial market in the last five years in Hawke's Bay."

Mr Tremain said, like the residential market, this year's General Election had resulted in people "taking a breather" for for of the year.

"Since then, the best month we had in the year was in October and November went along nicely as well."

That was made up of investment sales and good yields for vendors.

"There's just been a good turn over of investment stock and active yields. It's a real signal with what's happening with the rest of New Zealand, everyone's getting out of Auckland, so we've got a lot of buyers come out of that market. That has seen a real focus on Hawke's Bay in the commercial sector."

Bayleys Havelock North commercial and industrial sales manager Daniel Moffitt said market activity has eased over the last 12 months compared with the same period a year earlier.

"This has brought the total sales value down. Part of this, of course can be attributed to election year uncertainty and that as people come to terms with new government policy they will just get on with business."

That was great for vendors looking for tenants or selling.

"The Hawke's Bay Leasing market continues to remain strong with strong enquiry through the industrial sector with a lack of quality sheds for lease and sale, retail and office has been slightly slower however still an increase in activity from last year.

"There is no real comparison in regards to linking the rise in the housing market to the commercial sector however, what it does show is that there are more people and companies moving to Hawke's Bay, and they are leasing and buying commercial property which has created a short fall of quality listings."

Property Brokers regional manager Paul Whitaker said he had noticed an increase in equiries for lower-yield properties.

"That's due to residential rates declining too. Investors are happy to accept a slightly lower yield. In combination to that, people are looking for properties that are a good 67 per cent NBS (National Building Standard) with an obviously good tenant and good leases in place. We'll probably see those properties go at about the 6 per cent mark, depending on the variables the return can go up to 8 per cent and beyond."

Mr Whitaker said those 6 per cent properties were now selling at the same sort of prices that 5 per cent properties were selling for a year to 18 months ago.

"Average yields have come down about 1.5 per cent. It's just about where people can get the best bang for their buck and at the moment I think that's in commercial, without a doubt."

Hastings District Council's Economic Development and Urban Affairs Committee chairman Damon Harvey said the council was already looking to ensure it could attract further oportunity for commercial developments.

"The council is also undertaking revitalisation of the CBD and additional land within there. I think the vibrancy of the CBD is going from strength to strength. You only have to look at Fun Buns, Couple cafe, so all that is fantastic."