GIC's Kiwi Partnership May Lead To More Foreign Office Investments

GIC’s Kiwi Partnership May Lead To More Foreign Office Investments In New Zealand

NEW ZEALAND – Precinct Properties’ joint venture (JV) with Singapore’s sovereign wealth fund GIC could be a sign that overseas investors are returning to the country’s premium commercial property market, reported Radio New Zealand (RNZ) on Tuesday morning (8 March, SGT).

In late-February 2022, the Australian Financial Review (AFR) reported that GIC partnered with NZX-listed Precinct Properties to invest over US$1 billion in office properties.

GIC will own 75 percent of the portfolio, while Precinct will own 25 percent. The JV intends to look for office buildings with long-WALE of at least 10 years.

Notably, GIC has been investing significant amounts in Australia, pumping up to US$11 billion in commercial properties over the last 5 years, while Precinct Properties is the biggest owner and developer of high-end offices in New Zealand.

Investment house Forsyth Barr estimated about 60 percent of major commercial real estate (CRE) transactions here involved overseas buyers before the start of the COVID-19 pandemic. But they have been largely absent in the past 2 years.

Still, GIC’s partnership with Precinct Properties could lead to return of overseas commercial investors in the posh office market.

According to Chris Dibble, National Director for partnerships, research, and communications at Colliers, interest from foreign commercial property investors is rising again.

“Once they can get back into New Zealand we’re ready to undertake that due diligence process and get things moving.”

“We’re already lining up the presentations and the conversations and [we’ve got a] pretty busy schedule ahead over the next couple of weeks, [which was] really a trigger on some of those recent discussions around that border opening up a little bit earlier than expected.”

Dibble revealed that there would initially be a transition stage, wherein joint ventures that include offshore funds begin seeking good quality stock.

“That’s hard to come by, it doesn’t always appear. Even the local investors would love to be able to get their hands on some of the high-quality stock,” he added.

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