KEY POINTS:
One of Auckland's most active developers is questioning the impact of the real estate downturn, saying he has successfully sold a chunk of his investment portfolio.
Rick Martin, director of North Shore-headquartered Cornerstone Group, completed four real estate sales last week "all at our asking price" as part of a move to quit $150 million of land and buildings.
But Stephen Saul, managing director of Jones Lang LaSalle, said the market was awash with property. He questioned why anyone would quit their holdings now and said big parcels of land were on the market.
"Capital is scarce for all sorts of things and it's not a great time to be selling. What can I say? That's the fact. There's a lot of uncertainty and selling into this environment is going to be tough," he said, adding that he was not commenting particularly on Cornerstone's sales but on the market generally. The profile of buyers had changed recently too, he said.
"Banks have pulled back in the wake of the global liquidity crisis, funding is scarce and more expensive in this market. Institutions are taking a pause this quarter but a lot of high net worth individuals who have been waiting in the wings are emerging," he said, citing deals particularly up to the $40 million mark.
Saul said inner-city prime commercial property was faring better than many other types of real estate because of vacancy rates, rent growth, tenant quality and cash.
"It's the financial market that's busted right now," he said.
Martin said he would keep his Waimauku development, where he plans to develop a European-style village with 1375 units in neighbourhood clusters on a 464ha block of land north-west of Auckland.
"The reason for selling is cash, baby, cash! And, like everyone else, less debt.
"This will give me more time and money to push the Waimauku project," he said. But after finishing the 30-level Sentinel apartment tower in Takapuna, his strategy has changed.
"I don't intend to build another high-rise so I have decided to sell the high-rise sites I have although I know there will be a lot of older people in Orewa that will disappointed to hear that," he quipped, in reference to strong local opposition to his Nautilus apartment tower which dominates the seaside town.
"As for the large land lots, this sort of investment is better suited to a property trust that will want to build and hold the entire product, as Goodman Group has done with Highbrook," Martin said.
Martin said he had a range of funders. ANZ had loaned money to develop the Sentinel but Martin said they were almost fully repaid.
Cornerstone wants to sell its Silverstone business park near Silverdale, where Martin said the total investment needed was about $400 million but the finished value of any project could be about $700 million. Cornerstone is also advertising its 59ha Gateway business park. Both land parcels are in Rodney territory.
He is also selling a shopping portfolio, which he said was a mixture of small tenanted retail units spread around Albany and Orewa.
"I was surprised to see just how many there were as they just built up over the years - 84 units in total. I've had a couple of crazy offers but as it is such good stock I'm not going to let it go at under the right price.
"Some of my neighbours in Orewa have had their shops for over 50 years, and I'd say that the rent per year would now be more than the units cost to build."
Martin said he wanted a partner for another Albany project. In 2004, he bought freehold title on a 44ha block of land from Neil Developments for $250 million.
