NZ industrial property offers ‘good returns’, analyst says
By Andrew Bevin
May 25 (BusinessDesk) - New Zealand industrial property is offering investors “good returns”, growing faster than office and retail sites, a trend that’s been picked up on by some of the nations’ biggest listed property investors.
Over the past fortnight, three NZX-listed real estate investors indicated a desire to raise their exposure to industrial property. Argosy Property expects to have almost half its portfolio invested in the sector at the expense of retail, Goodman Property Trust will be almost completed invested in Auckland industrial real estate having sold its stake in a major office precinct, while Augusta Capital has bold plans to list an industrial property fund in two-to-three years.
Colliers New Zealand national research director Alan McMahon said growth in the broader property market might peak in the next few years, but “demand for quality industrial assets will go on forever”. Industrial property values have probably grown faster than other property classes, he said.
“There’s attraction to industrial because it’s straightforward, construction is simple and it shows good returns, especially in recent years,” McMahon said.
Rent for prime warehouse in Auckland climbed to $121 per square metre as at March 31 from $118/sqm a year earlier, while Auckland’s vacancy rate for industrial property fell to 2 percent at the end of March from 2.4 percent.
Goodman Property’s $2.2 billion portfolio will be fully invested in Auckland industrial property once the sale of its Wynyard precinct joint venture goes through, which chief executive John Dakin said last week was where the property investor wants to focus its efforts.
Augusta’s $118 million industrial property fund is largely exposed to Auckland, with three of its four properties in the country’s biggest city and one in Wellington. The fund is currently raising $75 million through a public offer, and signalled plans to list on the NZX within three years once it’s worth $250 million.
Meantime, Argosy’s 36 industrial properties were the only part of its portfolio to post an increase in income during the March 2018 year with a 7.1 percent gain to $39.4 million.