Commercial property sales could crack $10b this year with foreign buyers making big deals

Fonterra's headquarters, part of the VXV portfolio. Photo/Grant Bradley

Foreign buyers have dominated 2018's commercial property deals, which are predicted to exceed $10 billion by year's end.

Chris Dibble, Colliers International's research and communications director, said latest analysis showed total sales were on track to crack through $10b in 2018 and could reach a record.

Nine of this year's top 10 deals had buyers with strong overseas ties, he said.

That's partly because New Zealand's cheap, Dibble said.

"Their motivation is primarily centred on the relative value of our properties when compared internationally. Competition for quality assets globally has ramped up and large global funds are scouring the world for opportunities. New Zealand has a lot of favourable attributes when it comes to investing in commercial and industrial property," Dibble said.

This year's biggest deal is NZX-listed Goodman Property Trust's proposed $635m sale of the seven-building VXV Viaduct/Wynyard Quarter portfolio of office blocks to Blackstone, subject to Overseas Investment Office approval. Blocks are in that portfolio are the KPMG, Auckland Transport, Microsoft and HP, Datacom and Air New Zealand buildings, Fonterra Centre and Bayleys House.

Goodman also made this year's second-largest deal with its $209m sale of Central Park Corporate Centre at Penrose to Oyster Property Group in partnership with global investment firm, KKR.

Winton Partner's $200m-plus sale of the retail/commercial property of the QBE Centre at 125 Queen St to foreign-controlled Invesco was the third largest deal. The Sultan of Brunei owned that property before Winton.

Dibble said New Zealand was good for offshore buyers.

"The ease of doing business, transparent ownership and transfer system and benign tax system are positive features," he said.

Air New Zealand's headquarters in the VXV portfolio, sold this year. Photo: NZPA/David Rowland

The Government has banned non-residents and non-citizens buying New Zealand houses but commercial, industrial and retail properties can still be sold to overseas owners, subject to complying with the Overseas Investment Act.

Dibble said New Zealand was often on the radar for buyers from Australia, Asia, North America and Europe.

"We have typically come second to Australia, but this has changed due to the attractive gap between debt costs and investment yields our properties offer," he said.

Private, local kiwi buyers were responsible for 85 per cent of sub-$2m deals this year, Dibble said

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