Foreigners buying up

Andrew Reed.

More than half of $2.6 billion commercial property transacted so far this year in New Zealand, at individual prices above $2 million per sale, has been sold to foreign buyers, although some transactions are still subject to Overseas Investment Office approval, says Andrew Reed, newly appointed national director of capital markets at Colliers International.

"There is a growing wall of overseas money waiting to be deployed into suitable markets and New Zealand is receiving unprecedented levels of interest from these investors," says Reed.

"International investment into New Zealand commercial property has been a steadily growing trend for some years but 2014 has seen a rapid transformation," he says.

Recent major sales to overseas interests include: the Lumley Centre on Shortland St, bought by German fund Deka Immobilien; the National Bank Centre on Queen St, sold to Bloomberg Australia; and 50 per cent of Vogel Centre in Wellington bought by Credit Suisse Singapore.

Reed says Colliers views the wave of global institutional capital as commencing in 2012 with the sale of Westfield Shore City in Takapuna, Auckland to Singapore-based Aviva Investors Asia Pacific Property Fund.

He says overseas investors see the benefits of investing in this country as including absence of conveyancing duty and capital gains tax.

"Investors are still mainly attracted to income-producing assets, but we are also beginning to see a significant amount of interest in development opportunities."