A highly favourable exchange rate, low interest rates and attractive yields have boosted Australian activity in the New Zealand commercial property market, according to Ray White Commercial.
Ray White Commercial Auckland Managing Director Bruce Whillans said the New Zealand market returning to positive growth following a three year downturn was proving to be another magnet for Australian investors.
"This coupled with the Australian dollar sitting at a 10 year high to New Zealand puts Australian investors in a strong position to take advantage of firming yields and a potential exchange rate play," Mr Whillans said.
"We have fielded interest from sophisticated unlisted property funds based in Australia as well as high net worth privates and even developers who are attracted by the exchange rate.
"They see the two markets as sharing similar fundamentals, particularly Auckland, with the strongest motive being the exchange rate followed by our lower cost of funds and attractive yields.
"We are probably 12 months behind the kind of recovery cycle Sydney and Melbourne are experiencing, and can offer better buying as a result."
Mr Whillans said Auckland was the standout performer in the wider New Zealand market with its population growth rate on par with Australian capital cities.
"For the past 12 months, the Auckland industrial, office and retail markets have shown little movement in yields, vacancies or rental levels, with underlying economic trends pointing to a return to growth," he said.
Mr Whillans said New Zealand government policy encourages foreign investors with a high overseas investment threshold and no stamp duty, land tax or capital gains tax.
"While the Australian dollar remains at decade highs, currently 35 cents stronger than the Kiwi, and the spread between 90 day bank bill rates in both countries widens to 220 basis points, the cost of acquiring commercial property in New Zealand has never been more favourable," he said.
Mr Whillans said among the investment properties Ray White Commercial Auckland currently has listed for sale is an office building at College Hill in Auckland generating annual net income of almost $NZ1.9 million.
"With the market coming off a three year easing cycle, Auckland assets offer superb value for money while the market remains in a state of transition," he said.
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