Aussies join Kiwi struggle in property market Posted 2010, 17 August Over the past few years I’ve written a number of times about the Australian influence on the New Zealand property market. First it was, “The Aussies are coming”. Then it was, “The Aussies are here”. And most recently, “The Aussies are here and they are us”. And today, with the oversupply of commercial rental office space and residential high rise space, they are struggling for good returns the same as everyone else. Let me give you a snapshot… I know of a prominent CBD building owned by a large Australian concern that is desperately struggling to find tenants. The building doesn’t stack up against its competition, with no on-site car parking and small floor plates, to name a couple of disadvantages. It is getting to the stage where the owners might end up leaving the building empty because they don’t want to downgrade its value by dropping the rental below the levels required by their Australian masters. I predict this scenario could start to happen more and more, where overseas corporate investors who are more interested in the value of their asset than the income it generates are prepared to cut their losses so as not to run the risk of devaluing their asset simply to have it occupied. Commercial tenants looking for new premises should be aware that some major overseas owners might view things quite differently than local owners. As a British friend of mine says, some corporate landlords have “deep pockets and short arms”. They would rather have vacancies in their building than have it devalued by new tenants only prepared to pay lower rentals. Most local owners on the other hand often are prepared to have their buildings occupied at a lower rental just so they can show a yield on their investment. The prospect of high rise blocks in Auckland remaining empty for years on end is also looming in residential apartment blocks. I know of one very attractive building on the CBD fringe that is owned by an overseas concern that right now doesn’t see it as worth their while to complete the fit out when they can’t be confident of occupancy. They see it is in their best interest to leave it empty, possibly for years. So the Aussies are here, and so are a lot of other overseas property investors who right now have no real motivation to fill a number of empty buildings around the city. Being well prepared in an increasingly complex commercial property market is essential groundwork to successfully lease space.