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Some commercial properties in Auckland are selling for half the price of an average house and providing better returns

Property
Some commercial properties in Auckland are selling for half the price of an average house and providing better returns

Commercial investment property is no longer the preserve of the wealthy, with prices at Bayleys' latest commercial property auction starting at $545,000, which is about half the price of an average house in Auckland.

Bayleys offered 16 properties at their Auckland commercial auction this week with nine of them finding new owners, giving a clearance rate of 56%.

Prices ranged from $545,000 for a commercial property with development potential in Papakura, to $3.85 million for a modern retail/office building with development potential on Dominion Rd.

The rental yields ranged from 3.59% to 6.16%. And of course those were net yields because the tenants usually pay the outgoings such rates, insurance and some maintenance costs on commercial premises, making the returns far superior to the yields currently being achieved on residential investment properties in Auckland.

Bayleys also auctioned five commercial properties in the Waikato last week, two of them selling at prices that would be within the reach of many smaller investors ($620,000 and $701,000) with the others being passed in for sale by private negotiation.

Colliers International also reports that commercial properties have been selling well at auction, with Auckland properties providing yields that averaged 5.4%.

The details of the latest commercial property sales with photos of all properties including those that were passed in at auction can be viewed on our Auction/Sales Results page by selecting "Commercial Property Sales" in the "Property Type" search field.

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8 Comments

Even better , simply buy shares in a really good NZX listed property portfolio , and spread the risk .

Houses are simply a no-no and only clueless fools are buying them in Auckland as investments

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I agree. The best returns are in the biggest projects which are controlled mainly by the listed property trusts. There is quite a lot of competition in the smaller commercial market.

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Yes, we have been buying into these since 2004. Magical yield based on the original purchase price paid.
Still doing circa 5% tax paid on current values. Just like an extra couple of Nat Super payments with no costs to meet.

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Which one is that ?

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How geared up can that stock position be because a return on a deposit sized investment in the NZX is pretty sad. Also what will property values do if rates continue to fall? When and by how much do you think rates will rise by?

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Greg, what you say in your article is true but many residential investors don't understand that commercial property investing is a more serious, professional game. Property values are much more dependent on rental income and can remain untenanted for a long time (which means you property value nose dives). New tenants may want a refurbishment, a rent free period or other incentives to move in. Also Vendors, Agents and Buyers are much more astute (read sharks), so of course it can be done but you better get ready to take it very seriously. (I have owned many commercial and residential properties over time)

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agree. commercial is a whole different ball game.

Whilst many outgaining is paid by the tenant, choose a wrong type of property and it can remain vacant for long period time. With residential, much easier to rent out.

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