"New Zealand has earned its reputation as a true global safe haven” Says Bruce Whillans. Whillans Realty Group had an outstanding third quarter, with over $250 million in sales with the bulk of their activity in investment sales, reflecting a strong demand for income-earning property. 

Whillans Managing Director, Bruce Whillans said that in the 36 years he has worked in commercial real estate, he’s never experienced such a dynamic market.

“In March, buyers were unsure of the property conditions due to the global COVID-19 pandemic, so they took time out. Remarkably, this hiatus was short-lived.

“The ensuing regime of low interest rates reignited the investment market, with buyers actively chasing income-producing property. Developers also re-emerged, capitalising on the booming residential market,” he said.

Mr Whillans said the CBD office market remained resilient in the face of the global pandemic. Both primary and secondary vacancy rates remain below their 10-year average providing a buffer against significant swings in values and rental rates.

“With some occupiers shrinking their office footprint, there is a growing pool of office space to sub-lease. Faced with rising vacancy and the increase of available of space to sub-lease, incentives are likely to remain competitive.

Notable sales for the quarter 2020:

• 34 Shortland Street - Bruce Whillans - $67,500,000
• Farmers Queen Street - Henry Thompson - $48,000,000
• 152 Fanshawe Street - Bruce Whillans - $36,250,000
• 5 Short Street - Henry Thompson - $22,000,000

Whillans Senior Analyst, Brendan Keenan said Auckland’s industrial market has outperformed the wider commercial property sector driven by demand for warehousing, cool stores and logistics and the role they play in national security and the economy. In New Zealand, online shopping levels remain elevated, up on 22% last year while industrial vacancy rates remain a tight 1.4%

Brendan Keenan Senior Analyst Whillans Realty Group (pictured below)

The pandemic has had the most impact on Auckland’s prime CBD retail market with foot traffic in Queen Street down by about 35%. Across the board, rents on Queen Street decreased by 2.1% while inferior premises have fallen by as much as 11.65%. Prime CBD yields on Queen Street softened by four basis points in the six months to September.

“The financial impact of the COVID-19 pandemic led to a dramatic fall in global interest rates earlier this year, which in turn has impacted asset classes worldwide. The shift in interest rates is providing crucial support for the commercial property sector and it is also beginning to re-price the market.

“Six months ago, New Zealand’s major trading banks were forecasting house prices to fall between 10% and 15% but instead, median prices touched new highs in Auckland gaining an impressive 16.3%,” he said.

Mr Whillans commented that investors, first home buyers and owner occupiers are now competing for the limited amount of existing land stock available.

“We’re seeing strong demand for new-build housing particularly well-located sites.

“The CBD apartment and hotel markets have been hit hard with a handful of land sales in the city trading between 5% and 15% lower than their pre-pandemic levels.

“Moving forward, if border restrictions ease by the end of 2021 and the vaccine is approved and effectively distributed, one wonders if low interest rates become the jet-fuel that ignites the city’s housing and land markets.

“New Zealand has earned its reputation as a true global safe haven and while next year will not be without its challenges, we remain cautiously optimistic that there is light at the end of the tunnel,” he concluded.

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