Foreigners shunning nz

Foreign buyers are shunning the New Zealand property investment market with the number of deals plummeting, according to the latest analysis...

Foreign deals involving non residential property have fallen from a quarter of the market three years ago to just eight per cent last year, says real estate advisors and consultants CB Richard Ellis.

But analysts predict that the sector is set to recover soon on the back of low interest rates and poor returns from other classes of investments.

'There has been little interest from foreign buyers in 2008 with 89 per cent per cent of the sales volume from local purchases, eight per cent from foreign buyers and the rest undisclosed,' said Moricz Zoltan of CB Richard Ellis.

Last year 63 per cent of buyers were private, eight per cent were unlisted real estate trusts, seven per cent managed funds, five per cent syndicates, a further five per cent Government sector, four per cent corporate, two per cent trustee and the rest unknown.

Investors were the single largest type of vendor last year, accounting for nearly 80 per cent of the properties sold. That proportion was higher than in previous years.

'We have seen a major reduction in the proportion of properties sold by developers and this reflects the difficult market for developers with less newly developed properties entering the market. On average over the last 10 years, developers have made up around 15per cent of the vendors each year,' Moricz added.

He found a big reduction in the number and value of deals. Sales of investment real estate in the three main centres fell 72 per cent last year compared with 2007. Auckland sales numbers fell from 153 in 2007 to 63 last year, Wellington from 36 to 16, and Christchurch from 15 to 9.

Moricz predicted last year would prove to be the trough and the market would rise this year. More distressed properties would hit the market and the number of mortgagee sales would also rise, he said. Also low returns from other asset classes and falling interest rates could drive more people to consider real estate.

Source: www.propertywire.com