Commercial property

Year of the Tiger bodes well for commercial property as investors look to New Zealand as a ‘safe haven’

China’s Year of the Tiger could mean renewed interest in New Zealand commercial property from overseas investors seeking a safe haven amid the Covid chaos, a leading Asian property expert has said. sales.

James Chan, Director of Asian Markets

James Chan, head of the Asian markets division of Bayleys, has seen the country’s international commercial property investment grow from next to nothing to a major market force in his more than 30 years in the sale of commercial property .

As New Zealand emerges from two years of Covid-related uncertainty, he believes the Year of the Tiger heralds more positive times with renewed interest in our market among offshore investors who view the economy and response health facilities in the country have outperformed most of our global peers.

“In Chinese tradition, the Tiger signals a good year, and its attributes of ambition, courage and self-confidence will provide additional momentum to all investors after recent challenges,” Chan said.

“The Chinese New Year or Spring Festival is celebrated not only by those in mainland China, but also by countries and regions such as Singapore, Hong Kong and Taiwan, Malaysia, the Philippines and Thailand. We see and hear growing signs that investors in these and other global markets are targeting New Zealand as a haven of relative safety and stability.

“Investing and doing business here was already considered easy thanks to our stable political and economic environment, relatively easy transaction processes and competitive pricing in commercial real estate.

“Renewed interest from international buyers will be good news for local sellers, in the form of increased competition and demand,” Chan says.

Born and raised in Hong Kong, Chan came to New Zealand in the late 1980s and joined Bayleys to help establish its Asian markets division, later becoming the first Bayleys salesperson to achieve gross commercial and industrial sales. of $1 billion. Today, he leads a specialized team of multilingual salespeople serving foreign and local investors in Southeast Asia.

His career spanned several real estate cycles as well as the 12-year cycles of the Chinese zodiac.

“Around the Year of the Tiger in the late 1980s, it was difficult to find buyers for the commercial properties that large corporations, banks, receivers and statutory administrators began to offload after the stock market crash of 1987.

“Given the small pool of local buyers and domestic capital, this period saw the emergence of foreign investors as a new source of potential buyers,” Chan explains.

“Japan, Singapore, Hong Kong and Taiwan were among the first countries or regions to complete transactions. The ranks of Southeast Asian investors – individuals, families and businesses – grew as the commercial real estate market bottomed in the 1990s, often buying at double-digit returns unthinkable back home.

Notable transactions during this time included the sale of the iconic Chateau Resort Hotel in Tongariro to a Malaysian investor. Hong Kong-based Hind Group, owned by the Jhunjhunwala family, has bought $100m worth of properties in Auckland, establishing long-standing family ties with New Zealand that have been strengthened in recent years through ownership of the hotel chain Sudima.

“Mainland China was still largely inaccessible to sellers or agencies at this time, but an opening up of New Zealand immigration saw the start of a wave of new residents from Southeast Asia and China – including many came with an active interest in commercial real estate.”

Despite this early activity, when Bayleys pioneered portfolio auctions with the launch of its Total Property portfolio shortly after the 1998 Year of the Tiger, “virtually all commercial and industrial sellers and buyers were Kiwis,” says Chan.

“Now we have customers of all ethnicities – or their New Zealand representatives – active in the auction room, as well as overseas sellers selling through us.”

The first free trade agreement between New Zealand and China in 2007 opened up new possibilities for buyers.

The global financial crisis, which followed soon after, saw Asian investors seek out counter-cyclical opportunities. This meant that when the Year of the Tiger returned in 2010, the ambitious and courageous qualities of the Tiger once again came to the fore, paving the way for continued growth in Asian investment in New Zealand commercial property.

Recent years have seen the growth of digital channels targeting Chinese speakers, such as HouGarden, as well as strategic global collaborations like Bayleys’ partnership with Knight Frank.

Ryan Johnson, National Commercial and Industrial Director

Ryan Johnson, Bayleys Country Director Commercial and Industrial Operations and Head of Capital Markets, says the Knight Frank alliance has further strengthened Bayleys’ reach, particularly in Hong Kong, Singapore and China.

“Our teams have the ability to draw insights and expertise from the Knight Frank pool of world-leading research and resources in global markets. Together, Bayleys and Knight Frank have an unparalleled ability to connect buyers and sellers globally, and have further raised the profile of New Zealand commercial property among domestic Asian communities and international markets and have resulted in significant transactions,” Johnson said.

By the late 2010s, Asia had become one of New Zealand’s biggest sources of capital, with China second only to Australia as a source of foreign direct investment.

Investment from China, including Hong Kong, reached NZ$10.6 billion in 2018. The NZ China Council estimated that one-sixth of that investment went into commercial properties, hotels and apartment developments, largely concentrated in Auckland.

“In addition to major transactions, this growing interest in New Zealand commercial property is also translating into developments,” says Johnson.

“The impact is shaping Auckland’s skyline, with Chinese developers spearheading key projects such as the luxury Park Hyatt hotel and the country’s two tallest residential towers, Pacifica and Seascape.

“Future predictions are tricky in the age of Covid. But as we look to the Year of the Tiger in 2022, it seems certain that overseas exposure will remain a vital part of key property sales – and Asian investors and developers will remain an important part of our real estate landscape. commercial and industrial,” says Johnson.

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