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September 29, 2015

New Zealand based DNZ Property has purchased a 19-strong retail portfolio for US$255 million (NZ$287 million) in one of the largest transactions of its kind in the country’s history.

The nationwide portfolio of supermarkets – which is leased to General Distributors, the operator of Countdown supermarkets in NZ and an ultimate subsidiary of Woolworths – was sold on behalf of Antipodean Properties and Antipodean Supermarkets.

“The highly competitive nature of the sale process was a clear demonstration of the weight of capital seeking New Zealand retail assets,” said Stuart McCann of JLL’s Singapore office, who handled the sale together with the firm’s head of Capital Markets in Asia Pacific, Stuart Crow

“We can equate the unsuccessful bidders to an aggregate of close to NZD3 billion which reflects a significant level of unsatisfied demand from offshore and onshore sources.”

The deal attracted significant levels of offshore investor interest yet, interestingly, none of the offshore investors who participated in the process had ever invested in New Zealand before with previous mandates concentrating on the Australian market.

“The combination of a solid economic backdrop and a highly transparent real estate market in New Zealand, together with the strong competition for opportunities in Australia, is resulting in a number of investors now also considering New Zealand”, said Mr Crow.

The DNZ deal is the latest in a number of core real estate portfolio transactions to have concluded across Australia and New Zealand in recent months, highlighting the significant amount of capital targeting the region.

In July, China Investment Corporation acquired Investa Property Group’s AU$2.45 billion office portfolio in Australia and, most recently, Singapore-based Ascendas closed on a AU$1.073 billion logistics portfolio from GIC and Frasers Property Group.

“Based on these latest deals across the office, retail and industrial sectors, we estimate that there is more than AU$25 billion in unsatisfied demand targeting core real estate in the Australasian region,” says McCann.
And, going forward, it looks like investors will continue to pursue opportunities in New Zealand.

The country’s GDP grew by 3.5 percent during 2014 and house prices grew more than eight per cent nationwide over the 12 months. This coupled with population growth of 1.4 per cent per annum is flowing through to consumer spending with retail sales growing by 5.5 per cent during the year to June 2015.

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Stuart Crow

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