Retail property market to surge
Retail typically accounts for around 20 per cent of national property sales transaction activity for Colliers, compared to 50 per cent in the industrial sector.
“Large scale retail asset sales in the North Island – originally brought to market in 2015 – will demonstrate the sector’s dominance,” a Colliers spokesperson said. “The complexity involved in these transactions slowed down the process, which were originally thought to sell within the 2015 year. Investors will treat investment opportunities on a case by case basis in 2016 – no matter the offering.”
Retailers’ prosperity in the short to medium term is expected to be driven by positive demographic and socio-economic factors that will boost the number of people buying and the amount they are spending at their shops.
“Not all retailers will be positioned well in this regard, but retailers enjoying a positive mix of these factors will flourish,” Colliers said.
“We expect that 2016 will still provide diverging commentary surrounding the suburbs versus the CBD, strip versus mall and offline versus online retailing. The government’s latest changes to GST for online retail will bring New Zealand in line with global best practice.”
According to Leroy Wolland, Colliers’ director of retail, retail is benefiting from record high net immigration, strong labour conditions and a rising housing market, all within a low interest rate environment.
“The demand for retail space within Auckland’s CBD, suburbs and shopping centres illustrate a sector on fire,” he said. “Vacancy levels are at record lows across Auckland and several new retail developments in the Auckland market have opened fully leased.”
He added that this them in retail property is common throughout NZ.
“In Christchurch, the rebuild is well under way, seeing record activity levels. Wellington is back in favour with rising interest levels from international retailers off the back of commitment from David Jones and Seed Heritage with several other international brands knocking on the door.
“The buoyancy in the investment sector for quality retail assets remains strong. Two recent large scale retail asset transactions in New Zealand were the sale of the 25,500sqm large format zone of the Westgate Town Centre and the sale of 19 Countdown Supermarkets, which sold at strong yields illustrating the demand for quality retail assets.
“We see this demand continuing through 2016.”
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