Auck. property boom

Press, 29 December 1986, Page 18

Auck. property boom

PA Auckland The commercial property boom in Auckland is entering its third year with little sign of abating but rising interest rates look likely to ease the domestic market. The Institute of Valuers 1986 property market report shows that most inner-city commercial sales had been on the side streets while Queen Street property was being tightly held. Newly listed property firms and financial institutions had been particularly active, the more established firms taking a lesser role and concentrating on adjoining properties to extend existing holdings. Recent sales showed that buyers were making little distinction between freehold and leasehold commercial properties. Sales in the inner city core and fringe areas were still setting records. The Regent Hotel carpark site sold before auction at $7879 a square metre while six years previously it had changed hands at $406 a square metre. Similar sites which sold earlier in the year for around $2OOO a square metre reached $5OOO a square metre by September. The ASB Chambers in Queen Street sold for $12,000 a square metre in November. The adjoining RSA premises in High Street sold for $7400 a square metre and three weeks later changed hands again for nearly $lO,OOO a square metre. House sales in Auckland slumped 15 per cent in the first half of the year compared with the last six months of 1985, with little change in prices. An initial oversupply of

houses on the market became a shortage with interest rates dropping from 22 per cent to around 18 per cent. Land values in Wellington’s central business district have reached more than $BOOO per square metre notes the institute. In the last two years, sales have risen from $l5OO to $2OOO per square metre for central inside allotments to the latest recorded sales of $5OOO-$6OOO in areas off themain retail streets. Sales have been in excess of $BOOO per square metre on main retail streets. “Perhaps the most significant ‘open- market’ sale was the successful tender for the

Central Post Office site by the Kupe Consortium, reported to have paid $27M,” says the report. “After making allowance for the value of the excavation, shoring and foundations, a $7OOO per sq m basic land value is indicated over the large block comprising 3086 sq m.” Demand for office space has remained strong duriing 1986 with take-up being 100 per cent. Last year, rentals of new office buildings had reached occupancy cost levels of $195 to $215 per sq m. Today, there are committed rentals at occupancy cost levels of $270 to $320 per sq m.