Pro Commercial property

2020 shapes up as a stellar year

This year is shaping up to be another stellar 12 months for commercial and industrial property in the Hawke’s Bay. Investor confidence remains high and market activity is strong on the back of an outstanding 2019.

Yields are likely to compress further on the back of record lows in 2019. The sale of the 19-unit Harvest Lodge Motel in Havelock North for 4.54 per cent last year was the sharpest yield in history for a Hawke’s Bay commercial property. While not all properties will attain such returns, we see yields in the 5 to 7 per cent range as representing the new norm, given the continuing low interest rate environment and strong investor appetite.

The Hawke’s Bay industrial sector is expected to continue its strong run in 2020, buoyed by the thriving horticulture sector. This trend is exemplified by the sale in 2019 of a 6.3ha industrial property at 22 Irongate Road, Hastings, which will be transformed into a $30 million new pipfruit facility. This was the largest industrial land transaction in the Hawke’s Bay last year.

Havelock North will continue to be a focus for growth, particularly in the office sector. Numerous investment advisory and management firms have established offices in Havelock North in recent years, putting the town in a position to become a regional financial hub in the future. The location is attractive due to its relatively affluent residential population and its proximity to key markets in Hastings and Napier. Strong horticulture and tourism sectors are also adding to growth.

The future of retail continues to be augmented by the tech sector, rather than disrupted. Tenants benefit from a wide range of apps to assist them with business, focusing on customers, staff and productivity benefits. Owners benefit from better understanding about property management and facilities management requirements. Investors get a better understanding and assessment of risk and potential future benchmarks.

Key to all of this is access to data and information. The advent of 5G in New Zealand will help transmit significant amounts of raw and visualised information at an immense pace. Connectivity will be a major game changer over the next few years.

To assist our clients in this space, Colliers International has been running Colliers Proptech Accelerator to create solutions, shape technologies and find opportunities.

Commercial property transaction volumes in Hawke’s Bay across all asset classes are likely to remain buoyant in 2020. Colliers had very strong years
in 2018 and 2019, resulting in our Hawke’s Bay office being named Small Commercial and Industrial Agency of the Year at the 2019 REINZ Awards. Commercial property investor confidence was 23 per cent net positive in Colliers International’s latest survey, which is line with national averages over the past two years.