Elections, Christmas, New Year Holidays all done and dusted. Pity about Covid, however, at least we are faring better than the rest of the world.
I have included with this publication recorded sales from the 1 December 2020 to YTD. (click on link to view sales)
The commercial market mirrors the residential market somewhat, with Investors making multiple offers on well leased property. Several sales achieving yields between 6% and 6.5% and one sale to my knowledge selling below the 6% yield mark. I have just recently confirmed a investment type sale at 5.45% return but it did have a twist with the sale in the fact that the passing rent was discounted.
We have been saying for the last couple of years buyers far outweigh the number of properties that are available to purchase which creates strong competition. As long as our interest rates remain low this appetite for investment property will continue.
There is also strong demand from owner occupier buyers, with next to nothing available.
By my reckoning a believe there to be only 7 genuine investment properties on the market in Dunedin and Mosgiel at the time of writing this.
We have 4 industrial units about to be built which will suit owner occupiers, but, will only satisfy a small number of our buyers.
Leasing enquire is strong for all types of property, with industrial property being highly sought after. I have had a count on the REINZ Prime Commercial site and there are only 13 Industrial units for lease in Mosgiel and Dunedin.
Prime office space is also at a premium with very little vacant space on offer. The larger floor plates of 300m2 plus are a little bit harder to lease. Conversely, we have leased a number of smaller spaces in recent times.
Vacancies in the retail sector have remained steady at around 10% with the prime George Street precinct still sought after. (click on link to view Adam Binns vacancy survey)
We are of the opinion that 2021 will be pretty much the same as 2020 without the 6 weeks lock down hopefully. The market will remain strong with competition amongst buyers for investment property, yields will continue to fall so long as interest rates remain low.
Leasing of all types of property will remain high especially for industrial units, and with the new hospital rebuild starting to crank up and a number of large new builds including the ACC build. All this will make for exciting times in Dunedin.