Hawke's Bay commercial property market on the rise

The $25 million Havelock North Village Exchange development, which features several retail outlets alongside a hotel, is coming on-stream to a buoyant Havelock North retail scene.

Hawke's Bay commercial property is on the rise, with a Hastings property sale reflecting a 12 per cent annual return on investment since its 2011 purchase for $1.04 million.

Primarily leased to Caltex, in 2011 the purchase gave a 10 per cent yield with 4.3 years left on the lease.

The property on Karamu Rd recently sold for a ballpark price of $1.9m and a 6.25 per cent yield, with an eight-year lease remaining.

"The price gain of almost $900,000 in five years is impressive," Turley & Co director Pat Turley said.

"That's 84 per cent or 12 per cent annually. Not too shabby. It was a very good property play."

With the release of the valuers and property strategists' PropertyMetrix report for the third quarter, he said there were plenty more impressive results in the Hawke's Bay commercial property market.

With some data lagging, he said the market looked to have returned to historic highs.

The report said a very strong finish to 2015 flowed into 2016, and with it likely the $50m mark for quarterly commercial-industrial sales would be again reached this year.

Since 2007 there have been just five occasions when sale values reached the mark: four times between 2007-08 and the fifth at the end of 2015.

The number of sales was increasing. Since 2007 there have been six times when sales totalled more than 50 in a quarter: five times between 2007-2008 and the sixth at the end of 2015, a year when sales improved every quarter.

Built commercial-industrial property sales for 2015 were $163m, the highest level since the last peak in 2007 of $251m.

Commercial-industrial land sales spiked in the second quarter of 2015, the first time since 2007 land sales exceeded $10m in one quarter. The large number in the third quarter of 2015 was partially attributable to a large block of land sold with 17 titles.

"There appears a strong chance of the strengthening market continuing ... with data lagging," he said.

Turley & Co also released its Taradale & Havelock North Retail Market Review, showing a just two retail vacancies ahead of the $25m Havelock North Village Exchange development due to open in December.

That situation will likely change as some high street businesses move into the development, thanks to a common landlord.

Taradale retail remained flat with six retail vacancies according to the report.