Southern Growth And Opportunity

The commercial and industrial property market in the South Island is somewhat segmented – both geographically and agency-wise – something that leading agency Bayleys has recognised and acted on.

It recently appointed William Wallace to the new role of general manager South Island commercial and industrial, and strengthened its market presence with Bayleys Canterbury acquiring longstanding Christchurch-based commercial and industrial agency, M B Cook Limited.

With Bayleys having key clients in the North Island looking for opportunities and assistance in the South Island, Christchurch-based Wallace is focusing on solidifying Bayleys’ business throughout the mainland.

Commenting in the latest edition of Bayleys Total Property, Wallace said there’s a significant weight of capital seeking investment opportunities in the South Island.

“There’s a recognised shortage of new land coming on stream for commercial and industrial development in some core South Island regional centres – sometimes down to geographic constraints, other times reflecting a lag between market demand and Council planning frameworks.”

“This puts the focus on projects already consented and underway or opens up conversations around where the next big opportunities lie.”

“My feeling is the wider Otago region is undervalued and ripe for growth – but given the scope of projects underway right around the South Island, it’s clear that there will be compelling opportunity for private investors at every juncture.”

Wallace said the investment being made by private, iwi and public entities in the South Island property arena signals confidence to the wider market with each region offering compelling underlying fundamentals.

“Commercial and industrial property activity has intensified in the Nelson-Tasman region, on the back of a strong regional economy and the lifestyle benefits the area offers,” he said.

“We’re seeing more-intensified residential development with scale, there’s an identified shortage of quality CBD office stock, large-format retail precincts have traction in the suburbs, and Richmond is undergoing huge transformation with residential, commercial and industrial development burgeoning.”

With around 70 percent of Marlborough’s regional economy linked to the wine sector and huge global demand for New Zealand wine currently, there’s an air of real positivity in Blenheim with significant construction activity happening across property sectors.

“The Ministry of Education is repositioning three Marlborough schools for efficiencies and to cater to growth, and a new $20 million district library/art gallery is under construction with a boost from the Provincial Growth Fund,” explained Wallace.

“Additionally, Summerset is building a $125 million retirement village, several industrial developments with scale are progressing, and council is addressing the need for higher intensification residential options.”

Further south, Wallace said Christchurch is thriving post-quakes with infrastructural investment providing confidence and opportunity for private commercial and industrial investment, underscored by the appeal and affordability of housing in the region.

“The list of civic, recreational, educational and healthcare projects underway is extensive and more than $2 billion of new housing was approved in the last year,” he said.

“Plus, there are 247 new infrastructure projects covering water, transport and community facilities underway, while roading upgrades have streamlined arterial across the city and along strategic corridors.

“The biggest pinch point is a shortage of industrial land to absorb demand from large-scale occupiers, with existing and planned developments by private developers and iwi entity Ngāi Tahu Property largely at capacity.”

Identifying the wider Otago region as a potential growth node, Wallace acknowledged that although Queenstown will face inevitable challenges as borders fully reopen, there is evidence of considerable investment in the town indicating that developers are confident in its future.

“When visitors return in real numbers, the rental accommodation squeeze for workers and labour shortages will be amplified,” he said.

“But on the plus side, there are new additions to the hotel market, the continued evolution of mixed-use precincts, and urban growth opportunities along the southern corridor starting at Frankton, down to Hanley’s Farm, and Jack’s Point.

“Several lifestyle and residential developments are being considered for fast-tracked resource consent under COVID-19 Recovery frameworks, while the mixed-use Lakeview precinct on a 10ha former campground site in central Queenstown is being progressed by an Australian/New Zealand consortium.”

The Wānaka property market looks set for transformation with council projecting its population would grow from 8423 permanent residents to 15,200 by 2050, an 80-percent increase.

Wallace said three priority growth areas for Wānaka have been identified in the council’s new spatial plan – the corridor from Wānaka town centre to Three Parks, future urban areas in Hawea and south Wānaka, and existing areas in Luggate and Hawea.

“There are some exciting projects on the go with the $280 million Silverlight Studios film studio, and the Northbrook Wānaka Retirement Village within developer Winton’s wider Northlake mixed-use precinct, fast-tracked under special COVID-19 legislation.”

“Further, Metlifecare recently announced it will build a $200 million premium retirement village at the Three Parks mixed-use commercial precinct.”

As for the second-largest city in the South Island, Dunedin, retail dynamics in the CBD’s core are shaking out as council undertakes a $28 million upgrade to the central city.

Wallace said Southern District Health Board’s plans for a world-leading health and education precinct centred around a $1.47 billion new hospital – one of the country’s largest health infrastructure projects – is touted as a transformational project for the wider city.

“Construction sector hub Workforce Central Dunedin recently stated there's sufficient infrastructure work happening in Dunedin to sustain a boosted skilled construction labour force for at least the next 15 years.”

“Of note is the joint venture project between Ngāi Tahu Property and ACC for a new 8000sqm office building in Dowling Street expected to be completed by early 2024, and Otago Polytechnic’s multi-million-dollar trades training centre, He Toki Kai Te Rika, is well-progressed.”

“We’d expect to see private investors and developers follow this lead, taking confidence from these large-scale projects that are underway.”

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