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Precinct upbeat about Auckland, prefers government over corporate space in Wellington

Thursday 17th November 2016

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Precinct Properties New Zealand is upbeat about its tilt towards Auckland, where it sees downtown real estate underpinned by an expanding population, while in Wellington it prefers government tenancies over corporates. 

Chief executive Scott Pritchard told shareholders at today's annual meeting in Auckland that significant building work and a swelling population in the country's biggest city provided a number of opportunities for the property investor.

"Auckland office vacancies are at historic lows and we see demand continuing to stay high, with restricted land supply and construction price inflation keeping space at a premium," Pritchard said in speech notes published on the NZX. "The Auckland CBD retail environment has strengthened considerably over the past few years driven by strong demand from international and local retailers, improvement in dining and entertainment precincts and strong growth in tourism numbers." 

Precinct has increased its portfolio weighting in Auckland over recent years and has two major developments - the Wynyard Quarter and Commercial Bay - underway in the country's commercial hub. By value, about 69 percent of its $1.46 billion portfolio is in the country's biggest city, and its corporate exposure in Wellington has reduced to just 11 percent with the Bowen Campus upgrade in the capital city almost fully leased to the Crown. 

"The reduced 11 percent weighting in Wellington corporate assets reflects challenges in that market, while we remain in a good position serving the government market," Pritchard said. 

Earlier this week Precinct said its Wellington portfolio came through the 7.8 magnitude earthquake near Kaikoura relatively unscathed, and chairman Craig Stobo today said its Deloitte House property was the only building not yet cleared for occupation and re-occupied. 

"The initial assessment for Deloitte House at 10 Brandon St indicates that there has been some damage to building services and fit outs within this building, and further assessments are being undertaken over the next two weeks," Stobo said. 

Stobo confirmed a first-quarter dividend of 1.4 cents per share, and affirmed expectations for an annual return of 5.6 cents. 

The shares rose 0.4 percent to $1.22, having declined 2.8 percent so far this year.

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