NZ$500 million in FDI funds leaves the Property Market in New Zealand since 2008

Comments Off | 09-24-2010

In a report commissioned by research firm, CB Richard Ellis, almost half a billion New Zealand dollars of foreign investment property market is believed to have left the country since the year 2008. The huge amount has largely been motivated by the duress foreign investors in the country’s property market have recently come under to sell down assets due to the global financial meltdown, CB Richard Ellis said in a report.

That portends massive outgoing funds from the property markets as performance maintains a rather uncertain nature. According to CB Richard Ellis, the most common sellers in the last two years have been property trusts and other managed funds. CB’s research took into account office buildings, the retail and industrial space in the investment market when undertaking the study.

However, other managed funds constituted about 65 per cent of all properties disposed in the first half of 2010 only, particularly due to the asset sale by Brookfield Multiplex, the Australian realty major, noted the report. Zoltan Moricz, CB Richard Ellis senior director said the study reveals a lot given the magnitude of foreign investments that have been witnessed in New Zealand previously.

For instance, noted the research, in the year 2006/2007, the net inflow of foreign funds into the New Zealand investment market was almost half a billion dollars. The research thus reveals that in the first half of this year alone, some $204 million worth of foreign funds left New Zealand, a fact attributed particularly to the pull back of Australian investors.

Moricz noted that it is quite a noteworthy trait of the market since overseas investors were common then (2006 and 2007) and they were direct drivers of the market in terms of liquidity and pricing, he said. According to him, firms with listed property trusts and other managed funds had been heavy sellers due to the fact that quite a few of them had been close to-or were breaching-their covenant ceilings.

New Zealand was seen as a peripheral market rather than a core market for many overseas investors, and therefore one which they were prepared to sell out of, Moricz said. The pressure had not been as severe on private sellers because they were ‘more transparent and flexible in some cases’, Moricz said. Private sellers made up 25 per cent of all sellers during the first six months of this year.

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Posted in Foreign Direct Investment/FDI New Zealand, General |

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