Sales activity in the commercial property market in New Zealand has hit record levels as investors pour into office assets in Wellington and Auckland.

As at October 27, real estate agency Jones Lang LaSalle said the overall value of commercial property transactions worth $NZ5 million or more so far this year had risen from $2.1 billion during the same period last year to a record $NZ2.8 billion thus far this year.

That figure will almost certainly exceed $NZ3 billion by the end of the year as more than $500 million in sales are expected between now and December 31.

While sales were well up in the biggest market of Auckland, capital city Wellington is leading the way with volumes up 46 per cent compared with the same time last year.

In terms of sectors, office assets have been the biggest contributor, as the PSP Investments’ massive $NZ1.2 billion purchase of the 18-property AMP Capital Property Portfolio saw transaction volumes in this segment rise from $NZ1.1 billion to $NZ1.3 billion.

JLL managing director Nick Hargreaves said the New Zealand market is benefiting from attractive yields and a strong economy.

“These record figures prove to investors that there is a significant amount of liquidity in New Zealand and local, Trans-Tasman, European and Asian investors see New Zealand as a leading destination for capital and a key location in the Asia Pacific region,” he said.

“The yield spread available on prime assets in New Zealand is relative to regional peers and the growth outlook means we are seeing a number of global institutional investors looking to include New Zealand as part of their wider global allocation.”

Meanwhile, the firm’s director of research and consulting Justin Kean said a limited supply of ‘trophy’ assets meant investors were looking beyond Auckland into smaller cities like Wellington and beyond their traditional focus on Premium/Grade A assets to Grade A/Grade B assets.

The latest report comes as New Zealand continues to experience an economic and construction boom amid strong demand for space in Auckland, improving conditions in Wellington and the rebuild of Christchurch.

In the first eight months of this year, consents were issued for the building of 9,018 new dwellings and 2.973 million square metres worth of commercial space according to Statistics NZ – almost twice the level of the same period experienced in the depth of the slump three years ago in terms of housing and well up on any other figure seen in the past five years in commercial building.

Apart from the AMP Capital transaction, other large deals in New Zealand commercial property concluded thus far this year include the sales of Auckland’s Pakuranga Plaza to a Singaporean purchaser for $96 million; Chorus House, 66 Wyndham Street Auckland to a private onshore investor for $88 million; Grant Thornton House in Wellington to a private foreign investor for $63 million; and Telecom Building C to Augusta Capital for $65 million.