Exempt from the overseas buyer ban, returns as high as 12.9%, and rising values for 8 consecutive years!

Following the global financial crisis, New Zealand’s economy grew steadily for 8 consecutive years, while industrial property recorded double-digit growth.

 

In 2010, New Zealand’s economy emerged from the economic crisis, with 92,325 businesses in the industrial sector employing 425,200 people. By February 2018, industrial employment had reached 514,700, an increase of 21%; the number of industrial businesses had also risen to 104,915, up 13.5%.

 

Data from a property agency shows that industrial property vacancy rates have reached a record low this year, putting upward pressure on rents. New Zealand’s industrial property vacancy rate is currently 2.4%, compared with 4.4% in 2017.

Demand for industrial property has been supported by persistently low interest rates as investors seek assets with higher returns. With commercial and industrial property also exempt from the overseas buyer ban, it has become a very popular choice.

 

This trend is particularly evident in Auckland, Hamilton, Tauranga and Wellington. Average industrial property vacancy rates have continued to fall, with rates in these cities’ main areas now at or below 3%. Tauranga’s performance is particularly striking.

 

At the beginning of 2015, Tauranga’s average vacancy rate was 13.5%. The latest survey shows it has plunged to 2.4%.

 

However, a shortage of land supply could constrain industrial property growth. There is little development land in Auckland’s established industrial areas. In 2018, Auckland accounted for 43% of industrial property building consents issued nationwide. Without land supply constraints, Auckland could have seen greater development.

 

Auckland is the engine of New Zealand’s economy. With the residential market cooling, more investors are turning their attention to industrial property. After all, industrial property is exempt from the overseas buyer ban, while Auckland’s supply of land available for industrial property is constrained by scarce land resources.

 

If you are interested in industrial property, take a look at this 1-hectare property prominently marketed by Haigh Robinson!

 

This 1-hectare property at 10 Norman Spencer Drive is in the heart of Manukau’s industrial area. Suitable for redevelopment or land banking, it offers strong rental income and potential capital growth.

 

Property details

 

The property occupies 10,324 square metres and currently has 5,296 square metres of older warehouse space divided into 8 tenancies, with 2,671 square metres of vacant land at the rear. Of its 8 tenancies, 6 are currently occupied, generating net income of nearly $400,000 a year. If all 8 tenancies were fully leased, income would exceed $600,000 a year.

 

A range of commercial development opportunities

 

The property may be best suited to redevelopment into light industrial warehouse units, which are in very high demand. Alternatively, it could accommodate one or two warehouses designed and built to order. Investors could also hold the property as a land bank while enjoying relatively high rental income and future capital growth.

 

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The property is zoned Light Industry and is surrounded by light industrial areas accommodating activities that do not produce offensive odours, dust or noise emissions. These include manufacturing, production, logistics, warehousing, transport and distribution. Certain retail activities are also permitted, such as trade suppliers, vehicle sales and garden centres.

 

The property is centrally located in Manukau, with convenient access to the Southern Motorway, State Highway 1, and the Western Motorway, State Highway 20, making Auckland Airport very accessible. Over the past ten years, Manukau has become a commercial, cultural and educational hub for South Auckland.

 

Cavendish Drive is a main road serving the eastern and western parts of Manukau’s central business district and Auckland International Airport.

 

A strategic development area for Auckland

 

Manukau is in a strategic high-growth area of Auckland. Auckland Council’s long-term strategic plan, the Auckland 2050 Plan, sets out its economic, social and infrastructure investment plans through to 2050.

 

Manukau’s development as a regional centre began in the 60s of the 20th century, and the council is maintaining this population and infrastructure growth strategy. Manukau is Auckland’s largest “growth node” outside the CBD and should continue to see above-average population growth, private and public infrastructure investment, and above-average growth in rents and capital values. Other smaller growth nodes are Westgate, Albany, Warkworth and Pukekohe.

 

Local government has invested in Manukau since the 60s of the 20th century. Recent major investments include the Vodafone Events Centre; new apartments and hotels; expansion of Westfield shopping centre; a new university campus and integrated railway station; and a new bus station.

 

Major investment is under way to improve road transport to the south and the airport, alongside a substantial urban regeneration programme by development agency Panuku.

 

Auckland has less than 200,000 square metres of vacant industrial space, and industrial property vacancy rates five years ago were twice today’s level.

 

Auckland now has less than 200,000 square metres of vacant industrial space, with particularly strong demand for industrial units with floor areas of around 200–400 square metres.

 

Demand in Manukau is growing strongly, driven by broader economic factors and pricing in East Tamaki and Auckland’s inner-city industrial areas.

 

The property is for sale by negotiation. Please call us for more information and to discuss whether it meets your investment criteria.

 

 

Kurt Zhu – Property Broker

m：+64 (0) 21 623 688

e：kurt@haighrobinson.co.nz

Wechat: metalboy0601

 

Connie Lui – Property Broker

m：+64 (0) 21 176 7670

e：connie.lui@haigrobinson.co.nz

 

Alistair Macrae – Director, owner

m：+64 (0) 27 421 6529

e：alistair.macrae@haigrobinson.co.nz