New Zealand Market Update 1Q 2015. NZ’s economic growth story Source: RBA, RBNZ OCR cut by 25bps...

New Zealand Market Update1Q 2015

NZ’s economic growth story

Source: RBA, RBNZ

OCR cut by 25bps to 2.25%

“In Australia the available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak. As a result, the unemployment rate has gradually moved higher over the past year.” Glenn Stevens, 3 Feb 2015, RBA Govenor

OCR No change at 3.50%

“Annual economic growth in New Zealand is above 3 percent, supported by rising construction activity and household incomes. The housing market is showing signs of picking up, particularly in Auckland.” Graeme Wheeler, 29 January 2015, RBNZ Govenor

New Zealand on the World Stage

Source: Various Google Images

As well as some really important people

Economic IndicatorsContinued expansion in Domestic Trading Activity and GDP

Source: StatsNZ, NZIER, Colliers International Research

1996

1996

1996

1996

1997

1997

1997

1997

1998

1998

1998

1998

1999

1999

1999

1999

2000

2000

2000

2000

2001

2001

2001

2001

2002

2002

2002

2002

2003

2003

2003

2003

2004

2004

2004

2004

2005

2005

2005

2005

2006

2006

2006

2006

2007

2007

2007

2007

2008

2008

2008

2008

2009

2009

2009

2009

2010

2010

2010

2010

2011

2011

2011

2011

2012

2012

2012

2012

2013

2013

2013

2013

2014

2014

2014

2014

2015

2015

-50

-40

-30

-20

-10

0

10

20

30

40

50

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

Experienced DTA, LHS GDP, RHS

Ne

t %

of

firm

s

An

nu

al %

ch

an

ge

Economic IndicatorsFurther employment growth


1996

1996

1996

1996

1997

1997

1997

1997

1998

1998

1998

1998

1999

1999

1999

1999

2000

2000

2000

2000

2001

2001

2001

2001

2002

2002

2002

2002

2003

2003

2003

2003

2004

2004

2004

2004

2005

2005

2005

2005

2006

2006

2006

2006

2007

2007

2007

2007

2008

2008

2008

2008

2009

2009

2009

2009

2010

2010

2010

2010

2011

2011

2011

2011

2012

2012

2012

2012

2013

2013

2013

2013

2014

2014

2014

2014

2015

2015

-6

-4

-2

0

2

4

6

8

-60

-50

-40

-30

-20

-10

0

10

20

30

40Employment growth, LHS

Numbers employed, lagged 3 months, RHS

An

nu

al %

ch

an

ge

Ne

t %

of

firm

s

Economic IndicatorsPopulation grows

Source: StatisticsNZ, NZIER, Colliers International Research

32933

33025

33117

33208

33298

33390

33482

33573

33664

33756

33848

33939

34029

34121

34213

34304

34394

34486

34578

34669

34759

34851

34943

35034

35125

35217

35309

35400

35490

35582

35674

35765

35855

35947

36039

36130

36220

36312

36404

36495

36586

36678

36770

36861

36951

37043

37135

37226

37316

37408

37500

37591

37681

37773

37865

37956

38047

38139

38231

38322

38412

38504

38596

38687

38777

38869

38961

39052

39142

39234

39326

39417

39508

39600

39692

39783

39873

39965

40057

40148

40238

40330

40422

40513

40603

40695

40787

40878

40969

41061

41153

41244

41334

41426

41518

41609

41699

41791

-10

-5

0

5

10

15

20

25

30Net Migration Arrivals Departures

Pers

ons

(000

's)

Auckland leads the way

Source: StatsNZ, Colliers International Research

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5% Auckland Region New Zealand

June Year

Ann

ual P

erce

ntag

e Ch

ange

in E

stim

ated

Res

iden

t Po

pula

tion

Investors confident, but cautious

Source: Colliers International Research

Commercial property confidence*weather map

31%63%

-25%

20%

23%

-3%

49%

-15%

10%

-1%

61%

48%

* Net %

31%

Investor Confidence


Whangarei

Palmerston North

Napier/Hastings

Dunedin

Nelson

Wellington

Hamilton

Christchurch

Tauranga/Mt Maunganui

Queenstown

Auckland

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Dec-14 Jun-14 Dec-13

Investor ConfidenceAuckland, Wellington, Christchurch, and Hamilton


Jun

-09

Se

p-0

9

De

c-0

9

Ma

r-1

0

Jun

-10

Se

p-1

0

De

c-1

0

Ma

r-1

1

Jun

-11

Se

p-1

1

De

c-1

1

Ma

r-1

2

Jun

-12

Se

p-1

2

De

c-1

2

Ma

r-1

3

Jun

-13

Se

p-1

3

De

c-1

3

Ma

r-1

4

Jun

-14

Se

p-1

4

De

c-1

4

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Auckland Wellington Christchurch Hamilton

Optimism is growing


Auckland Wellington Christchurch-20%

-10%

0%

10%

20%

30%

40%

50%

60%

14%

-12%

49%44%

13%

46%

Dec-12 Dec-14

Reta

il In

vest

or C

onfid

ence

(Net

Pos

itive

)

Vacancy IndicatorsDifferent locations, different drivers


National Vacancy Rates & Trends

Location & Sector Current Vacancy Rate Forecast

Auckland CBD Office 8.2% Down

Auckland Metropolitan Office 8.9% Down

Auckland Industrial 2.9% Down

Auckland Retail 4.6% Stable

Wellington Office 11.4% Up

Wellington Industrial 5.6% Down

Wellington Retail 9.8% Down

Christchurch Industrial 2.0% Stable

Dunedin Office 14.5% Stable

Dunedin Retail 8.0% Stable

Different drivers dictate future performance


Dec-95

Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Dec-19

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%Auckland CBD Auckland Metropolitan Wellington CBD

Offi

ce V

acan

cy R

ate

Forecast

Landlords lock in rental growth


Dec-96

Dec-97

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Dec-19

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Auckland CBD Prime Rents Auckland CBD Secondary RentsWellington CBD Prime Rents Wellington CBD Secondary Rents

Ave

rage

CBD

Pri

me

Offi

ce N

et R

ents

($/m

²)

Forecast

TERA SurveyGreater need for higher NBS rating


Under 33%

33% to 67%

Over 67%

0% 10% 20% 30% 40% 50% 60%

12%

43%

45%

2H 2014

1H 2014

2H 2013

1H 2013

Retail Investors Less Optimistic


Au

ckla

nd

We

llin

gto

n

Ch

ristc

hu

rch

Au

ckla

nd

We

llin

gto

n

Ch

ristc

hu

rch

Au

ckla

nd

We

llin

gto

n

Ch

ristc

hu

rch

Au

ckla

nd

We

llin

gto

n

Ch

ristc

hu

rch

Overall Office Industrial Retail

0%

10%

20%

30%

40%

50%

60%

70%

80%

63%

19%

48%

70%

29%

42%

74%

16%

57%

44%

13%

46%

Ne

t P

os

itiv

e C

on

fid

en

ce

Seven year slog endsRetail sales back on track


35125

35217

35309

35400

35490

35582

35674

35765

35855

35947

36039

36130

36220

36312

36404

36495

36586

36678

36770

36861

36951

37043

37135

37226

37316

37408

37500

37591

37681

37773

37865

37956

38047

38139

38231

38322

38412

38504

38596

38687

38777

38869

38961

39052

39142

39234

39326

39417

39508

39600

39692

39783

39873

39965

40057

40148

40238

40330

40422

40513

40603

40695

40787

40878

40969

41061

41153

41244

41334

41426

41518

41609

41699

41791

41883

41974

42064

42156

42248

42339

11,000

12,000

13,000

14,000

15,000

16,000

17,000

18,000

Re

al s

pe

nd

ing

pe

r c

ap

ita

, 2

01

4$

00

0

Fore

cast

s

Source: Auckland Council, StatsNZ, Colliers International Research*Usually Resident Population from Census 2013 Area Units

Retail IndicatorsMore retail space of all types needed – an Auckland example

2013* 2021 20310

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

1,427,1091,730,416 1,984,171

2,436,109

2,953,861

3,387,027

LFR (>450m²) SFR (<450m²)

SFR = 2m² per personLFR = 1m² per person

Retail IndicatorsPaymark Retail Sales year to December 2014 versus year to

December 2013

Source: Paymark, Colliers International Research

Auck

land

/Nor

thla

nd

Wai

kato

BOP

Gisb

orne

Tara

naki

Haw

ke’s

Bay

Wan

ganu

i

Palm

erst

on N

orth

Wai

rara

pa

Wel

lingt

on

Nel

son

Mar

lbor

ough

Wes

t Coa

st

Cant

erbu

ry

Sout

h Ca

nter

bury

Ota

go

Sout

hlan

d

New

Zea

land

-4%

-2%

0%

2%

4%

6%

8%

10%

5.9%4.9%

5.9%

-0.8%

0.1%

3.5%

5.4%

3.2%3.9%

2.5%

8.2%

5.2%

0.0%

5.2%

0.0%

8.5%

-2.1%

5.4%

Valu

e of

Spe

ndin

g (P

erce

ntag

e Ch

ange

)

Industrial Land Values Comparison


Ma

r-0

7

Se

p-0

7

Ma

r-0

8

Se

p-0

8

Ma

r-0

9

Se

p-0

9

Ma

r-1

0

Se

p-1

0

Ma

r-1

1

Se

p-1

1

Ma

r-1

2

Se

p-1

2

Ma

r-1

3

Se

p-1

3

Ma

r-1

4

Se

p-1

4

$200

$250

$300

$350

$400

$450

$500

$550

$600Auckland Region Auckland City Manukau City North Shore City

Hamilton Tauranga

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

2014P0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Total Value Total Volume

Agg

rega

te T

rans

actio

n Va

lue

($, m

illio

ns)

Agg

rega

te T

rans

actio

n Vo

lum

e

New Zealand transaction volumes strongAll price levels (2014 Provisional)

Source: Colliers International, CoreLogic

Excludes $1.3 billion of GIC joint venture purchases with Goodman and Scentre (Westfield)

Recent Sales – Office

450 Queen Street, Auckland Central $27.5m - 8.5%

AECOM, Auckland Central $68m – 8%

Lumley Centre, Auckland Central$146m, 7.08%

SAP Tower, 151 Queen St, AKL$97m – 7.50%

46-58 Albert St, Auckland$40m – 5.95%

18 Sale Street, Auckland Central$10.5m – 7.03%

Recent Sales – Retail

160 Ponsonby Rd, Ponsonby$6m – 6.2%

568 Great North Road, Grey Lynn$1,475,000 – 4.6%

Unit R3, Constellation Dr, North Shore$730,000 – 6.7%

Waitakere Mega Centre$45.75m - c8.5%

ASB Orewa, Orewa$2.9m – 6.11% (passing)

4065 Great North Rd, Kelston$2.017m – 6.8%

Investment SectorTotal Returns, Asset Allocations

Source: IPD & Colliers International ResearchNote: Direct property returns based on PCNZ / IPD Index* as at March 2014

All Commercial Property New Zea-

land

MSCI NZ Equities NZ-LPV's J.P. Morgan, 7-10 Year Bonds

Inflation CPI-5

0

5

10

15

20 1 Year 3 Year 5 Year 10 Year 15 Year

Tota

l Ret

urn

(Rol

ling

Ann

ual %

pa)

26


Workplace reportOffice density by private and public sector

National Auckland Wellington Hamilton0

5

10

15

20

25

15.6 16.1

19.2

24.4

17.0 16.6 17.7 16.817.9 16.719.0 19.4

2010 2012 2014

Pri

vate

Sec

tor

Off

ice

Den

s-it

y (m

²/w

ork

stat

ion

)

National Auckland Wellington Hamilton0

5

10

15

20 16.9 16.2 16.7

8.4

17.416.0

17.2 18.2

13.9

17.9

13.4 12.8

2010 2012 2014

Pu

bli

c S

ecto

r O

ffic

e D

ensi

ty (

m²/

wo

rkst

atio

n)

DisclaimerWhilst all care has been taken to provide reasonably accurate information within this presentation, Colliers International cannot guarantee the validity of all data and information utilised in preparing this research. Accordingly Colliers International New Zealand Ltd, do not make any representations of warranty, expressed or implied, as to the accuracy of completeness of the content contained herein and no legal liability is to be assumed or implied with respect thereto.

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New Zealand Market Update 1Q 2015. NZ’s economic growth story Source: RBA, RBNZ OCR cut by 25bps...

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