Strong commercial property prices are pushing the net yields on some properties down below 3%.
A string of commercial sales just reported by Bayleys Real Estate included a property at 692 Dominion Road in Auckland's popular restaurant strip at Balmoral, which was operated as a Thai restaurant (pictured above).
The building covered 238 square metres but sat on a 1313 square metre site, which would have appealed to a wide range of buyers with an eye to future development options.
It sold for $3.05 million, providing the new owner with a net yield of 2.39%.
Also yielding below 3% was a two level character house converted to offices at 481 Parnell Rd which Bayleys sold for $2.85 million, giving a net yield of 2.81%.
Colliers also reported a sale with a net yield below 3% in its latest results, with a property 350-352 Manukau Road at Epsom in Auckland which was occupied by a Burger King restaurant and a service station, selling for $15.15 million providing a net yield of 2.79%.
However those were the exceptions, with sales of several other properties from around the country providing their new owners with net rental yields of 5% or more.
Full details and photographs of the latest commercial sales by both Bayleys and Colliers are available on our Commercial Property Sales page.
On the residential property front auction rooms remain busy, with interest.co.nz monitoring 288 auctions in the week of 13-19 February and sales achieved on three quarters (76%) of those.
However results have been more mixed at the Auckland apartment auctions, with only one of the five properties offered selling under the hammer at City Sales' latest apartment auction.
At Ray White City Apartments, three of the seven apartments offered sold under the hammer, while CBD car parks proved popular.
Two car parks on different levels of the Heritage Farmers parking building on Hobson Street in Auckland's CBD both sold under the hammer at Ray White's latest auction.
One on level two sold for $80,000, while another on the rooftop level (uncovered) sold for $68,250.
Details of all the properties offered at the auctions monitored by interest.co.nz and the results achieved are available on our Residential Auction Results page.
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10 Comments
One of those rare honest pondering opinion out there, in absence of any govt prudent measures:
https://www.stuff.co.nz/opinion/124358100/the-myth-of-the-ethical-prope…
Why isn't that guy selling his rental at a discount price to a first home buyer? That will make him feel better. Yet he seems to want the government to step in and redistribute everyone's wealth!
Seems like some commercial property investors are very optimistic about the future. Given that the price tags on some of these properties might be reasonably hefty, these people might actually be better off leaving their capital in cash (unless they believe property will remain to be a hedge against money supply inflation that is off the hook). While we would say these people are behaving 'rationally', the atmospherics are forming for a black swan event that takes down the stupid property bubble.
WTF this won’t end well.
It is already not going well.
Yields & interest rates are intricately entwined in a downward spiral, get used it.
I think these sorts of articles are put here to test the financial intelligence level of readers. Like 'whoa, dude, look at these low yields!'
These examples have very good reasons for the low commercial yields. The first one in Dominion Road is a land holding opportunity with development potential. A 1313 square metre site is quite large. At he same time it earns enough yield to cover the mortgage interest. Could be a bit of a bargain.
The second one in Parnell is a magnificent house in the DGZ. 225 square metres of house on a freehold section in a very choice neighbourhood looks quite a bargain at 2.85M.
https://www.bayleys.co.nz/1690754
The third one in Epsom is a 'substantial strategic landholding' according to the advertising blurb.
So commercial yields have very little to do with the prices paid for these properties and it certainly is not a signal that commercial property buyers have lost their senses.
Why would you buy a carpark with the government and councils rabid desire to get all onto public transport via EV policy congestion taxes new apartments with no car spaces just to name a few?
I guess it gives people a space to park and live in their new tiny houses and its cheaper than a section.
Thank you for the background research and analysis. Us, readers need to hold these clickbait journos to account. Otherwise we might as well start wearing MAGA hats and following QAnon forums...
You wouldn’t want facts to get in the way of another sensationalist property story would we ?
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