The end of another financial year for some of us, and the onset of Autumn is almost upon us, which means it’s time to give you an update on the Dunedin Commercial Real Estate Market. 15 Recorded bona-fide Commercial sales for the last 6 months to end of March 2022. I am aware of two other unconditional sales which occurred in February but not yet recorded. One property we successful negotiated, was for a sale price of $1,330,000 which was a 5% net yield on passing rent.
Of the 15 sales I believe 4 of these were investment sales purchased by passive investors looking for a return, The rest were development properties, some with holding income on short term leases and we estimated another four sales of vacant land ready for development.
Sales volume is well down for the period with sales for the corresponding time last year being 47, a 68 % decline in volume. This decline in sales volume is not attributed to lack of buyers, it is the opposite, lack of listings.
Yields for investment property have remained low to date and have been hovering around the 5% mark for the last 12 months for well presented, well located, and well tenanted property.
Future yields we believe will creep up as interest rates increase, with purchasers wanting better margins on their borrowings and what the property is retuning, obviously this will in turn result in lower sale prices for investment property. On the flip side the positive is that all rents have increased across the board for investment property, especially for industrial property.
Leasing has been a little bit slow over the last 6 months. Although it is historically quite over the December January period. Local cases of Omicron had definitely had an influence, with many sitting back and waiting for it to pass.
Industrial /warehousing space remains at a premium with approx. only 4000m2 of turnkey vacancies available immediately. There are several developments coming online which should ease the pressure somewhat. Rents for industrial space are still climbing with a couple of premises just being leased at $105m2 plus outgoings for what we consider B grade premises.
Office space vacancies remain at about 10% of the available space with rents ranging from $280 per m2 upwards to $340 per m2 (gross) depending on vicinity to CBD. There is plenty of C grade premises available in buildings with no lift access or car parking.
Retail space: There is a 13% vacancy for the properties located in the heart of George Street and surrounding Malls with a withdrawal of some National chains. We are still continuing to get enquiry for smaller ground floor retail outlets located outside the CBD.
If you would to have a chat over a coffee give either Graham or Jacquie a call.