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Financially dependant
07-12-2011, 04:10 PM
Is there anyone else looking for a commercial property in Chch for an investment?

They seem to be priced to an 8% yield (which just about covers finance costs) for smaller properties, the available leases seem to get snapped up quite quickly. The are properties available but not much is being built yet because of the geotec and insurance issues, the building costs are heading North and will accelerate when rebuild gets started.

So buying a newish property that did well in the quakes seems like a good buy at the moment?

Comments welcome??

Serpie
08-12-2011, 10:12 AM
I've been thinking about that FD, but not looking at the moment.

We're looking to settle out of some residential rentals in next year (if MWH can get their A into G) and so I'm starting to think about what to do with the funds, and commercial seems more attractive than going back into residential. We wont have enough to do something by ourselves, so keep us in mind for anything that you're looking at.

We'll have a more in depth "planning meeting" (mexican at ours) early in the new year?

Kees
08-12-2011, 04:59 PM
yes always looking bought a 6 year old building straight after september quake and stood up quite well against the other shocks so all good.
bought at 10.5% nett return lease comes up for renewal early next year with rent review as well so will be interesting i would think that commercial
will be in demand for the next few years.

Financially dependant
12-12-2011, 09:00 PM
yes always looking bought a 6 year old building straight after september quake and stood up quite well against the other shocks so all good.
bought at 10.5% nett return lease comes up for renewal early next year with rent review as well so will be interesting i would think that commercial
will be in demand for the next few years.

That is a good yield compared to quoted prices now, most are listed with a 8.5% yield.....but looking for a better return. I am quite surprised at the cost of finance quoted 8-9% what have been your experiances??

fungus pudding
13-12-2011, 08:07 AM
Is there anyone else looking for a commercial property in Chch for an investment?

They seem to be priced to an 8% yield (which just about covers finance costs) for smaller properties, the available leases seem to get snapped up quite quickly. The are properties available but not much is being built yet because of the geotec and insurance issues, the building costs are heading North and will accelerate when rebuild gets started.

So buying a newish property that did well in the quakes seems like a good buy at the moment?

Comments welcome??

It's a olong time since I owned Ch-ch buildings, and haven't looked there for a good few years. The thing you touched on to be very wary of is insurance. If premiums get too high then the rent (rate per metre) will drop a bit - or not increase - to compensate. There was a high percentage of Chch tenants who were only in business because of grotty old buildings with correspondingly low rent. I have a feeling some of them will be out of the picture forever. That might just mean the demand for space is not as high as some anticipate.

Financially dependant
13-12-2011, 09:01 AM
It's a olong time since I owned Ch-ch buildings, and haven't looked there for a good few years. The thing you touched on to be very wary of is insurance. If premiums get too high then the rent (rate per metre) will drop a bit - or not increase - to compensate. There was a high percentage of Chch tenants who were only in business because of grotty old buildings with correspondingly low rent. I have a feeling some of them will be out of the picture forever. That might just mean the demand for space is not as high as some anticipate.

Thanks FP you make a good point, to take that issue one step further low renters might be gone or maybe have to move out on to cheaper & stable land?? Food for thought..

Insurance is already doubling but pressure on available space is keeping rents up so ok at the moment but that might change...

Kees
13-12-2011, 10:45 PM
paid cash for that one so dont know, quite right about insurance but more to do with revaluation due to increased building cost's. specially replacement

fungus pudding
02-02-2012, 08:59 PM
paid cash for that one so dont know, quite right about insurance but more to do with revaluation due to increased building cost's. specially replacement

I'd say one helluva lot to do with perceived risk. Naturally insurance increases with higher replacement cost, always has - always will. Some insurers are demanding huge premiums, or simply refusing cover because of recent quakes and an unknown future.

Financially dependant
02-02-2012, 09:28 PM
I'd say one helluva lot to do with perceived risk. Naturally insurance increases with higher replacement cost, always has - always will. Some insurers are demanding huge premiums, or simply refusing cover because of recent quakes and an unknown future.

I note that the Insurance 'loss of rent' is running out now which might send quite a few owners to wall...there is still lots of unknowns out there..

fungus pudding
02-02-2012, 10:13 PM
I note that the Insurance 'loss of rent' is running out now which might send quite a few owners to wall...there is still lots of unknowns out there..

Yes. Might be some opportunities on the horizon ..............

Kees
05-02-2012, 07:30 PM
What book did you read that in?
building cost up from 900M2 to 1500M2 for commercial, land prices in town ain,t cheap people are not giving it away and as a investor sitting on the sidelines at times like these you will miss out on the best oppertuinity in years but DYOR,

Kees
06-02-2012, 11:54 AM
Thanks for the link it just proves my point about commercial property there is more to chch than a couple of blocks in the centre of town leave that to the dreamers on the council they still need the funding and thats were investors come in and they won't build if there is no return or if the council puts up to many restriction's it will just go into the to hard basket.

nextbigthing
08-12-2014, 11:44 AM
Anybody up with the play at the moment?

Thoughts on the current situation in Christchurch at the moment?

Kees
08-12-2014, 06:29 PM
Hi. been in commercial for 30 years + have just sold my last heavy commercial property in the last month plenty of capital gain but I am thinking this is finished for the time being with new build cost extreme and
tenants not being able to sustain these cost's.
so for now looking outside Chch.

Kees
08-12-2014, 08:21 PM
Yes looked at a couple but a bit far away the returns certainly look healthy.

nextbigthing
09-12-2014, 08:10 PM
Thanks guys. A quick scan on trademe commercial shows there's not a lot of decent stuff available in Dunedin so it's certainly in demand I guess.

cammo
17-12-2014, 07:32 AM
Chch - huge new build costs and rental price will hinder commercial for 5+ years easy. Accountants and lawyers etc will fill upper floors ok, but ground level tenancies are going to be harder to fill (internet, china etc is squeezing traditional retail, and cost of compliance, gst, paye, holiday pay etc mean theres little left for the owner). Having said that, alternative locations forced by EQ events may be significantly cheaper on white collar (addington, rolleston etc ) so the desire to move back to CBD may be seen as unnecessary.

Dunedin - elderly building stock is going to require EQ strengthening in next 15 so anything URM is like owning a timebomb. 70-80's stock with reasonable strength or easy upgrade might be best idea here.