“Domestic investors are taking up the slack” – CBRE’s Stringer on 2025 investment

13th March 2025 By Paul Yandall | paul@propertyticker.co.nz | @propertyticker

More activity is expected from international capital in New Zealand’s commercial property, but it is the rise of sophisticated local investors that will continue to define the market, says Andrew Stringer.

The senior managing director for CBRE in New Zealand told the Ticker that the story of the past two years has been local investors filling the gap left by subdued overseas interest.

While there has been some notable activity already this year from foreign investors, including Singapore-listed Hotel Properties Group’s agreement to acquire Precinct Properties’ hotel at One Queen Street for $180m, Stringer expected gradual growth in international capital deals.

“It’ll be a slow rebuilding of interest [for overseas investors] in the New Zealand market, not so much that they don’t have an interest in New Zealand, they’ve just had more compelling opportunities closer to home,” he said.

“But as activity and competition heats up in those markets, naturally, they start to look further afield.”

In the meantime, local investors would help plug the gap.

“In the New Zealand market, we’ve seen step into that void some really good quality domestic capital. They’re shifting well up the value chain in dollar terms [becoming] a really important piece of the puzzle,” Stringer said.

Helping to drive that growth has been a shift in available capital in New Zealand for local deployment.

“Year-on-year, we’re becoming a more sophisticated savings economy and so that money is really positive for domestic investment, whether it is via KiwiSaver or unlisted funds, that investment capacity is increasing all the time,” Stringer said.

“So whilst offshore investors might have scaled back a little, onshore investors, domestic investors are taking up the slack. That’s actually a really good thing for New Zealand, because it’s money generated by New Zealanders and reinvested into New Zealand – it’s a really positive story.”

Of the asset classes, industrial was seeing the most interest.

“Industrial remains a very firm favourite. It’s well tied into the New Zealand story – manufacturing and primary produce – and it’s well understood.

“And then probably office, but good office. The demand headwinds that the office sector has faced around occupancy, working from home – the remote working debate or flexibility debate – is reducing.

“We’re not back to where we where we were historically, but there’s momentum towards people spending more time in the office and that’s a strong positive pointer for those who hold high quality office assets.”

While domestic investment interest held up, CBRE latest Real Estate Market Outlook released this week noted improving sentiment across Asia Pacific, with investors “identifying attractive price points as the primary reason for their stronger willingness to buy”.

“These trends should bring a welcome liquidity boost to New Zealand’s investment landscape given our market’s reliance on offshore capital for a large portion of our institutional grade investment and development opportunities, although book values that may not fully reflect underlying market value adjustments over the past three years could present a barrier,” stated the analysis from CBRE New Zealand’s research team.

The agent forecasted yields firming moderately in 2025 as investor confidence and liquidity lifted, and interest rate falls filtered through.

“This scenario leads to average prime yields falling from their cyclical peak of 6.85% in mid-2024 to 6.50% in December 2025. But interest rate moves may not support yield firming in 2026.”

CBRE’s latest Real Estate Market Outlook can be read here.