Asian interest prompts offshore marketing trip

Chinese buyers continue to show keen interest in New Zealand commercial properties, with investors from Hong Kong, Beijing and Shanghai purchasing buildings to a total value of over $20 million through Bayleys' Auckland based International Division.

The sales comprise a block of shops in Mission Bay, a shop in Queen St and a Quest Apartment hotel in Dunedin.

The Mission Bay shops, located in a prime corner spot at the intersection of Tamaki Drive and Atkin Avenue, were sold for $9.5 million at a five per cent yield by James Chan, Bayleys' international sales manager, to a longstanding Hong Kong client and owner of Queen St buildings, who also purchased a Burger King restaurant in Westgate through Chan.

Comprising several adjoining character buildings, the Mission Bay property has 13 ground floor and upstairs tenancies, mostly food and beverage businesses including Oporto Chicken and New Zealand Natural ice cream.

Chan with colleagues Quinn Ngo and Alan Haydock, were also involved in the sale of 260 sq m retail unit 99A Queen Streetto a Shanghai based purchaser for $6,660,000 at a 6.1 per cent yield. The shop is leased to Oakley South Pacific Pty for 10 years from 2008 with annual rent reviews to the Consumer Price Index plus 1.5 per cent.

Bayleys Dunedin office and the international division joined forces in the sale of Dunedin's Quest apartment hotel for $6.3 million to a Beijing businessman with an engineering consultancy employing around 500 people and making his first investment in New Zealand.

It was sold as an investment property with a 10 year lease commencing 2012 and three five-year rights of renewal, to the hotel's operator QD Apartments Ltd.

Robin Hyndman, a director of Bayleys Dunedin, says the buyer was attracted by the high income yield of 9.2 per cent on the property's annual rental income of $580,000 - a much higher yield than he would have been able to secure on a property of similar quality in China.

"A number of offshore Chinese investors have been bidding on auction properties going under the hammer in Bayleys' Auckland auction rooms," Chan says. Earlier this year a buyer based in Guangzhou purchased a childcare centre in Mangere East for $1,320,000, at a 5.9 per cent yield while another buyer from Dalian purchased a 3298 sq m residential development site at Te Atatu South for $1,780,000.

Bayleys' international division will soon be embarking on another round of offshore marketing initiatives and is currently selecting properties for its latest Investment New Zealand portfolio

The portfolio will be promoted at three New Zealand investment seminars being run in conjunction with ANZ Bank in Hong Kong, Singapore and Kuala Lumpur and at a subsequent visit to China.

Chris Bayley, Bayleys international director, and Chan will be touching base with Bayleys' large database of existing clients in Guangzhou, Shanghai and Hong Kong, as well as meeting new potential investors.

Bayley says Asian investors are particularly interested in commercial investment opportunities either with strong tenant covenants and/or an opportunity to add value. Also on their radar screen are substantial commercial, industrial, mixed use and residential land holdings, although their preference is for properties on which development feasibility studies have been undertaken.

Other popular offerings are those which provide business and/or leisure opportunities such as vineyards, food production facilities, hospitality premises and accommodation complexes and golf courses etc.

"Motels are generating particularly strong inquiry at present, particularly where they are well located on sites that have future redevelopment potential," Bayley says.

He says there is also growing interest in New Zealand commercial property from large-scale Australian property investors looking to diversify their property holdings and the Investment New Zealand portfolio will also be promoted in Australia.

Bayley says the significant fall in the New Zealand dollar against US and Australian currencies has made New Zealand property more attractive to foreign investors.