Chinese investor shops on Broadway

Anchor tenant National Bank has a six-year lease with another six-year right of renewal. Photo / Supplied

An investor from southern China has paid $13.5 million for a seven-level office and retail complex in a prime location on Broadway in the heart of Newmarket's retail precinct.

Featured in Bayleys' latest Total Property portfolio, the property at 187-193 Broadway was sold by Paul Hain and James Chan, of Bayleys Auckland, at a 7.8 per cent yield on its net annual rental income of $1.055 million.

Hain says it is one of the bigger office building sales in what has been a quiet year for this sector of the market.

There has been a paucity of good quality office buildings on the market this year and this one attracted attention because of its strong location in Broadway's highest foot traffic area, the fact that it is one of Newmarket's best quality buildings and its blue chip anchor tenancy.

The National Bank, which occupies the 576sq m ground retail space and all of the first floor office space, provides close to 60 per cent of the property's income on a six-year lease which runs until September 30, 2013, with one six-year right of renewal. The remaining four office floors are fully leased to a variety of tenants on new six-year leases with in-built rental growth of 3 per cent per annum.

Chan says the purchaser comes from the province of Guangzhou in the south of China and has been looking to invest in New Zealand for some time.

I've kept in touch with this investment group on our regular visits to China but they have been waiting for the right properties to present themselves. This one was the type of property they were looking for and they moved very quickly to secure it.

Chan says as New Zealand's business relationship with China strengthens on the back of the free trade agreement between the two countries, Chinese investment in this country will inevitably increase.

At the moment the high New Zealand dollar is constraining foreign interest in our commercial property market, but longer term we expect China to become a significant source of offshore investment interest in New Zealand property. For this reason, Bayleys will continue to focus on maintaining and building relationships within China as well as other parts of Southeast Asia where there has been strong interest in New Zealand property such as Singapore and Hong Kong.

Chan says the Broadway building's prime location was the biggest attraction for the purchaser. The 2660sq m building sits on a 1003sq m site that also backs on the Osborne St retail precinct. It also adjoins the Rialto Centre where 10 retail outlets and its 7-screen cinema are being offered for sale individually. Chan says there has been good interest in seven of the retail outlets which will go under the hammer next Wednesday.