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
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
-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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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
Source: StatsNZ, NZIER, Colliers International Research
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
Source: Colliers International Research
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
Source: Colliers International Research
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.