Cross-border commercial real estate investment in the Asia-Pacific region is on the rise, with the recent sale of a significant suburban shopping centre evidence that private offshore capital sees value in the New Zealand market.

Underpinned by strong tenant covenants from a diverse range of 30 national and multinational occupiers and sweetened by a favourable zoning overlay that permits more intensive development activity, Kelston Mall at 16 West Coast Road, Glen Eden has been sold to an Australian buyer following a robust marketing campaign that drew wide attention from local and offshore buyer entities.

The centre’s Singapore-based vendor acquired the retail/service hub at the height of Auckland’s pandemic lockdowns in 2020, but had since changed its investment focus opting to recycle capital back into Asian markets.

The deal, brokered by Ryan Johnson, David Bayley and Jason Seymour of Bayleys’ capital markets team, is now unconditional with the sale price confidential.

Occupying a high-profile 2.1-hectare corner site with 7,729sqm of lettable area across both standalone and integrated components, and 388 carparking spaces, Kelston Mall is anchored by Woolworths Group, McDonalds and Mobil and has a weighted average lease expiry of more than three years by income.

It is a prime example of a diversified and relevant suburban retail/service offering in an identified growth area, which resonated with the trans-Tasman buyer, says Johnson.

“This is a proven, resilient and busy centre where the big core occupiers are complemented by specialty tenants across medical, food and beverage, childcare, retail, beauty and service sectors.

“It’s a quintessential neighbourhood mall that covers all bases for a broad residential catchment and is a lynchpin of the Kelston community.

“These credentials are bolstered by the Business - Local Centre zoning which currently allows development to a 16-metre height limit under the Auckland Unitary Plan, but additionally has potential future upzoning which could allow even greater site usage.”

Johnson says the sale demonstrates the enduring appeal of high-yielding commercial real estate assets and reflects several trends seen in the Asia-Pacific (APAC) region in recent years.

“A lot has changed in the deployment of global capital since 2020, with the pace now picking up. Ultra-high net worth Singaporean capital is through the roof, and private investors are cementing a strong position.

“APAC is increasingly seen as one market and that market is now important on a risk-adjusted returns basis. The flow of capital is very dynamic and moving more freely, which is positive for the New Zealand-Singapore-Australia triangle.”

Bayleys’ alliance with global real estate heavyweight firm Knight Frank gives vendors of New Zealand commercial and industrial property exposure to the wider APAC market, allowing access to a deep pool of capital.

“As an asset class, retail property has seen significant repricing in the last four years, but when viewed through a cap’ rate lens, remains very attractive to investors.

“Buyers are seeing opportunity to refresh centres through value-adding upgrades to broaden the tenant net and provide an improved shopping experience for customers. They’re also looking ahead for the potential to further optimise site use and leverage favourable higher density zoning overlays.”

Recently, Bayleys’ capital markets team also sold Eastgate Mall in Christchurch, in a deal which settled in late-November with the purchaser being property investment and development company Willis Bond.

“Seeing out the year with the confirmed sales of two large neighbourhood shopping centres shows there is depth to the market and there is significant capital circulating for well-located and optimally-zoned assets,” says Johnson.