This article is from the Australian Property Journal archive
THE surge of superannuation funds that will be available in New Zealand will create new appetite for offshore property investments.
According to DTZ’s new Trans Tasman Capital Flows report, the region’s commercial property market has recorded strong investment activity – the total value of transactions increasing five-fold since the early 2000s and now topping $NZ5 billion annually.
DTZ’s national research director David Green-Morgan said after being largely ignored during the 90s, the commercial property market is now attracting considerable interest from investors.
“Over the last five years, the demand for good quality property investments in New Zealand has outstripped the supply of properties available for sale by five to one.
“Given the small size of the domestic market, it is inevitable that NZ property investors will follow the path laid down by the Australian companies around the world by using their access to growing superannuation funds to invest in international property markets,” he added.
Green-Morgan said superannuation funds on average allocate between 8-10% to property which, if repeated in NZ, would see approximately $NZ200 million allocated to property.
“While NZ property trusts are currently only concerned with investing in the domestic market, the surge of superannuation funds that will be available, coupled with the lack of local investment opportunities, will lead to an increased focus on off-shore markets,” he added.
The DTZ report values NZ’s total commercial property market at more than $NZ100 billion ($US76 billion). This compares with the Australian market value of $US232 billion and the whole of Asia Pacific market value of $US4.42 billion.
DTZ’s director of international sales & investments Alistair Meadows said whilst there has been significant Australian capital flows into NZ in the last couple of years, institutional investors are likely to be more cautious through 2008.
Green-Morgan said improved domestic investor confidence, along with the arrival of Australian and other overseas institutional investors, has created a demand and supply imbalance that has forced yields to levels not seen since the 80s.
According to the DTZ report, NZ’s property market offers overseas investors an attractive alternative destination for their funds, including no capital gains tax on sales and no stamp duty on purchases.
NZ investors account for 62% of all domestic property transactions, Australia 30%, Germany 3%, Singapore 1% and other countries 4%.
The Top 10 property investors in the New Zealand market are: Goodman, AMP NZ, AMP Australia, Valad, ANZO, Multiplex, Dominion Funds, ING, Robert Jones-related companies and Orchard.
Australian Property Journal
