Launch of Residential Valuation & Advisory Service
FOR IMMEDIATE RELEASE - 16 September 2008
CBRE launches Residential Valuation & Advisory Services division in NZ
Auckland, NZ (16 September 2008)
The outlook for the Auckland residential market remains subdued, with little likelihood of a pickup in the traditional peak Spring selling season according to new forecasts from CB Richard Ellis.
In newly issued residential research reports, CBRE National Director, Residential Valuation & Advisory Services, Patrick Ryan, said this spring season could differ to those historically.
Vendors who had been holding back were expected to release pent up supply to the market but without the same level of willing buyers. Market activity would continue to be restrained in line with interest rates, which were tipped to remain at or around current levels until 2009, notwithstanding the recent and likely further decrease in the OCR by the end of this year.
The Auckland research reports have been issued in tandem with the launch of CBRE’s Residential & Valuation Advisory Services division. Mr Ryan said CBRE was the first national valuation firm to provide a dedicated residential valuations business, in response to client demand for timely, accountable residential valuations.
CBRE is already a major player in the Australian residential valuations sector, following a series of acquisitions in recent years. The residential valuations team has expanded from 20 to 80 in the past few years and is projected to expand to 120 by the end of next year.
According to CBRE’s Regional Director of Residential Valuations for Australia and New Zealand, Tom Edwards, the expansion of the Residential Valuation Business Line into New Zealand is a logical progression and has been a part of the company’s strategic plan for some time.
CBRE is widely regarded as the leading valuation firm in New Zealand, with 45 commercial valuers in five offices.
Mr Ryan said that CBRE wanted to extend its residential valuation services into all major metropolitan areas in New Zealand within the next two to three years.
“The major banks have been very supportive with the feedback being that there is significant demand for a highly credible valuation firm which can offer local expertise backed by a global platform,” Mr Ryan said.
“The systems we have established in Australia in recent years will allow us to provide as good - if not quicker - valuation turnarounds than our competitors. Our technology platform will allow us to provide a high level of compliance by registered valuers, which will ensure our clients receive independent, professional advice, which will be accepted by all the major NZ lenders.”
Obtaining a registered valuation is not common practice in the New Zealand residential market. However, Mr Ryan said the current volatility in the market was expected to drive increased demand from banks and consumers for quality residential valuation services.
Mr Ryan has an extensive background in the commercial and residential valuation profession. Prior to his appointment as head of CBRE’s Residential & Valuation Advisory Services line, Mr Ryan served as a Director within the firm with responsibility for the Industrial division as well as Institutional clients. He has extensive previous experience as a residential valuer, having commenced his career during the last major downturn in the market in the late 1980’s as a valuer for the then NZ Government valuation entity Valuation New Zealand.
Turning to the broader outlook for the Auckland residential sector, Mr Ryan said the combined sales valumes within Auckland over the last six months were at the lowest level since 1992.
“Nonetheless, there are clearly a number of cashed up purchasers who are biding their time,” Mr Ryan said.
“While some industry bodies are publicly stating that there has not been any noticeable depreciation in house prices, we believe this is due to the inability to discern any trend because of the light trading volumes. What we do know is that agents at the ‘coal face’ are reporting price drops of between 5% and 20% from last year,” Mr Ryan continued.
“Realistically priced homes continue to sell at reasonable levels but certainly the number of speculative buyers has dried up, however this could quickly change.”
Notwithstanding that the Reserve Bank may further decrease the OCR rate toward the end of the year, Mr Ryan said CBRE expected mortgage interest rates to remain at around current levels as the cost to NZ banks for overseas funds was high and this would not change immediately due to any local OCR drop.
While owners of premium homes of circa $5 million and above tended, to a degree, to be insulated from the current events, Mr Ryan said demand in this category was always more limited and would remain more so under the current circumstances.
At the same time, many investors who had purchased in the lower price bracket of up to $500,000 had taken properties off the market after receiving negligible interest. This had lead to a decrease in residential rental levels.
“We believe the Auckland residential market is still within the softening phase of the current cycle, and we do not foreee any pick up until 2009,” Mr Ryan said.
With the severe drop in sales activity through 2008, supply currently outweighs demand and a further softening in residential house prices throughout Auckland, and in most price categories, is possible in the coming months.”
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2007 revenue). With over 29,000 employees, the Company serves real estate owners, investors and occupiers through more than 300 offices worldwide (excluding affiliate offices). CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis is the only commercial real estate services company named one of the 50 “best in class” companies by BusinessWeek, and was also named one of the 100 fastest growing companies by Fortune. Please visit our Web site at www.cbre.com.