Premium industrial investments in Christchurch are generating strong interest from Auckland and out-of-region investors seeking returns superior to their home markets, according to Colliers Christchurch.
“In the last 12 months, we’ve seen multiple large industrial transactions sell to investors based outside Canterbury,” says Sam Staite, Director of Industrial at Colliers Christchurch.
The appeal to national capital stems from Christchurch’s compelling investment fundamentals particularly around yield compression in major cities.
For example, Colliers is marketing for sale 4 Sir James Wattie Drive, a modern 10,930sq m facility leased to The Comfort Group, Australasia’s largest mattress and foam manufacturer, which has just committed to a 10-year lease term.
Start your property search
“This property in the sought-after development of Hornby Quadrant represents exactly the type of superior, well-leased asset investors are looking for,” Staite says.
“We’re expecting wide interest from right around New Zealand, especially with interest rates decreasing and the prospect of even lower borrowing costs.”
Christchurch typically offers investors higher rental returns on quality assets with strong tenant covenants.
The increased demand over recent years is partly off the back of the city’s demonstrated economic fundamentals and recent migration patterns favouring the South Island, he says.
The Colliers Research ream reports a national rebound in investor confidence, with transactional activity rising throughout this year as deposit rates decline.
Returns are driven by income stability (yields) and modest rental growth.
Prime yields sit at 5.5 to 6 per cent in Christchurch, with select high-quality sales at low-to-mid 5 per cent.
With prime rental rates now sitting at just 60 per cent of equivalent industrial product in Auckland, there is also a market view that further growth is on the horizon.
The Hornby warehouse property marketed by Colliers exemplifies an institutional-grade industrial investment.
It was built by Calder Stewart in 2013 as The Comfort Group’s South Island production and distribution facility.
The fourth-generation family-owned business operates across seven manufacturing facilities in Australia and New Zealand, employing more than 1,000 people and producing renowned brands, including Sleepyhead.
The newly signed 10-year lease features fixed rental growth and market reviews at regular intervals.
“This is a true bottom-drawer A-grade investment,” adds Greg Goldfinch, National Director of Industrial at Colliers, who is marketing the property for sale alongside Staite.
“The combination of an excellent tenant with strong growth trajectory, modern construction by Calder Stewart, and one of Christchurch’s most desirable industrial locations creates a compelling proposition for investors seeking security and growth.”
With The Comfort Group in growth mode and looking to keep capital working in its business rather than property ownership, the opportunity arises for astute investors to secure this exceptional piece of industrial real estate, he says.
The property is offered for sale by deadline private treaty closing at 4pm on Wednesday 5 November, unless sold prior.
- Supplied by Colliers
