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Australian & New Zealand cities punching above their weight

Tuesday October 27th, 2015

Australasian cities are punching above their weight to attract the highest proportion of real estate investment in Asia Pacific, according to JLL’s Investment Intensity Index.

The report, which compares the volume of direct real estate investment over a three-year period to the economic size of a city, reveals that four out of the top five cities in the rankings are in Australasia. Sydney and Auckland take the top two spots, followed by Melbourne and Brisbane with Tokyo rounding out the top five.

“Australia and New Zealand are well represented in our Investment Intensity Index, as they are the most transparent real estate markets in Asia Pacific, due to attributes such as good market data availability, fair transaction processes, high standards of regulatory, accounting and corporate governance,” says Dr. Megan Walters, Head of Research, Capital Markets, Asia Pacific.

“In addition, prime office yields in Adelaide, Perth, Auckland and Brisbane ranged between 7 and 8 percent, the highest among the top ten, making these highly attractive to investors,” says Myles Huang, Research Director, Asia Pacific Capital Markets.

The report shows that cross border investment has played a key role in pushing Australasian cities to the top of the table.

Dr. Walters says, “The share of cross-border investment is above the regional average in most cities in Australia, New Zealand, together with Tokyo, as they have few government restrictions relating to foreigners buying assets.”

On average, commercial real estate assets worth 10 percent of city GDP change hands every three years, according to the report.

Aside from Tokyo, the other Asian cities in the top 10 are Hong Kong, Taipei and Singapore.

Top ten Asia Pacific cities in JLL’s Investment Intensity Index

- Sydney
- Auckland
- Melbourne
- Brisbane
- Tokyo
- Hong Kong
- Taipei
- Singapore
- Adelaide
- Perth

Chinese bank sets up shop in NZ

Thursday September 17th, 2015

Some big Chinese banks are starting to set up shop in New Zealand, but what could that mean for the residential mortgage market?

There have been recent reports that the Industrial & Commercial Bank of China (ICBC), which began lending last year, has been making inroads into the mortgage market.

Also, the China Construction Bank and the Bank of China are said to be establishing themselves in New Zealand.

Kiwis are unlikely to begin switching their accounts over to the newly established Chinese lenders en masse, but Massey University's David Tripe said the main competitive threat to local banks would be in trade banking - New Zealand companies doing business in China and Chinese firms coming in the opposite direction.

These banks might prove to be an attractive “familiar face” option for Chinese people in New Zealand, but are unlikely to have a big impact.

They are currently lending at the same rate as the major banks but the greatest fear would be that they will start lending at Chinese interest rates, which could led to a flood of buyers on to the market.

This is unlikely to happen. But there is probably an unwarranted fear about it which is related to that fear of ‘overseas’ buyers in the New Zealand market.

The reality is that the face of Auckland is changing. A lot of people are coming here from Asia and have existing relationships with these lenders which, in turn, could make it easier to borrow in New Zealand.

Queenstown: NZ's Boom Town

Thursday September 17th, 2015

It’s understating facts to say the Queenstown Lakes District region is an x-factor place. It’s New Zealand life with glamour and excitement added in equal measure.

It stands to reason long-term property investors should listen up. If regions were people, the Queenstown one – incorporating Frankton, Arrowtown, Lake Hayes and Wanaka – would be the genetically endowed.

Averaged out, capital gain factors are perennially strong here. Internationally renowned scenic beauty and adventure tourism say why.

High visitor demand has precipitated new flights, more directly from eastern Australia in particular. According to Colliers International 2015 statistics, aviation arrivals in Queenstown have risen by 40% since 2009. Increasingly, “downtime” months no longer happen.

Long-term resident Lindsay Borrie, APL property valuer, can remember years past when in May Queenstown was just waiting for winter fun. Now tourism is less purely seasonal, making it a safer property investment proposition.

Tourist spend in Queenstown alone has been estimated to exceed $1.2 billion annually, with as many as 57,000 in the daytime population during peak months and at least 48,000 in slightly cruisier months. Around 20,000 more people a day are projected in the next decade.

More attractions are on offer, with mountain-biking nudging the top of the list. Skiing was always strong, but that’s winter only, and golfing has become increasingly prominent in summer with Millbrook and The Hills courses attracting golfing tourism.

The main news for property investors is that the entire lakes district region has recently enjoyed several years of strong development, one which has a distance to run before producing any oversupply. Development activity has spurred on lifestyle activity, which has only created more development demands.

Auckland values up 20%+ on last year

Thursday September 17th, 2015

Residential property values just keep rising in Auckland – with new QV data showing increases of 20.4% over the past year, 5.6% over the past three months and 60.1% since the 2007 market peak.

This means the average value for the Auckland region is now $874,851.

With Auckland values leading the way, QV’s latest House Price Index shows that nationwide values increased by 11.3% over the past year.

Nationwide values rose 3.9% over the past three months and they are now 29.0% over the 2007 peak.

This leaves the average national value at $534,331.

QV spokesperson Andrea Rush said the ongoing rise in Auckland’s values was impacting on North Island markets close to the SuperCity.

Rush said Auckland’s high prices and lower yields appeared to be encouraging investors to look to regional centres around the country for investment properties

“The new LVR rules, set to come in over the next couple of months, may also be a factor incentivising this activity.”

Rush said New Zealand’s housing market was showing no sign of impact from recent events on the global economic landscape – like the dramatic fall in China’s share market.

Meanwhile, in Auckland itself, ongoing strong population growth and lack of supply continue to drive rapid increases in value and high sales volumes.


Apartments spread across Auckland city

Wednesday September 16th, 2015

Thousands of apartments are being built across Auckland — but many have already sold and supply is not expected to meet demand.

Many of these apartments are being sold off the plans. Where are they? Are they selling well? And who is buying them?

Around 6,000 new individual Auckland apartments are expected to be completed over the next three years.

This boom will produce about 3,200 apartments next year (approaching 2005's peak 3,700 completed) and then keep on producing.


Previous apartment booms were dominated by CBD construction, however next year's supply will be more evenly spread throughout the CBD, fringe and suburban precincts.

Colliers International's first Auckland Apartment Research Report calculates in the next 18 months the increase in total number of apartments will be 17 per cent in the CBD, 45 per cent in the city fringe, and 57 per cent in the suburbs.


Apartments planned for the city fringe and suburbs average five levels, says Lloyd. The CBD still attracts the 200-plus apartment pipeline.

Typical pipeline CBD apartments' internal areas at 45-60sqm for one-bedroom units, 70-90sqm for two bedrooms and 90-120sqm for three bedrooms.

Lloyd says pipeline trends include natural outlooks with greenery and "flexi" layouts. These one-bedrooms accompanied by a multi-purpose "flexi" room are smaller than minimum two-bedroom sizing.


Real estate commentators agree apartments bought off-the-plans command a premium over existing apartments as buyers will shell out more for new over "second-hand".

Most developments are seeking GST-inclusive prices which, when applied to internal area, work out at least $8,000/sqm and often $10,000/sqm.

Apartment Specialists director Andrew Murray says apartments he considers "liveable" in desirable city-fringe locations tend to sell off-the-plans for about $500,000 for a one-bedroom, $800,000 for a two-bedroom and $1 million for a three-bedroom.


As traditional property prices skyrocket, traffic congestion worsens and inner-city facilities improve, Auckland apartments are selling well, many as off-the-plans' purchases.

The 847 Auckland apartments pre-sold in the first quarter of this year exceeded the number of existing Auckland apartments sold in the same period for the first time this decade.

Most big pipeline apartment developments attribute around half their sales to investors. And plenty of baby boomers have hit "downsizing age" wanting premium apartments.


The apartment development pipeline will meet only a tiny portion of Auckland's growing property requirements.

Of the 6,400 planned apartments only 1,100 will be student accommodation and 500 held by developers to rent out.

Nearly 75 per cent of the 4,800 remaining yet-to-be-built units have pre-sold leaving only around 1300 apartments currently for sale off-the-plan.

Compare that to the nearly 30,000 people Auckland region swelled by in the year to July 2015, which was about half of the country's national net migration.

The current apartment pipeline will barely cover last decade's growth, let alone the growth we are seeing now with record net migration into Auckland

- NZ Herald

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