Major New Zealand real estate agency is bullish about Queenstown’s commercial sector for the next six years.
Bayleys Real Estate, which has a local branch, says the sector’s being bolstered by the tourism boom, an increasing wave of lifestylers and rising investor demand in the residential market.
The market report drills down into Queenstown’s growth, in turn, in the accommodation, retail and industrial sectors.
The hospitality sector is expanding on the back of high occupancy levels at peak periods, Bayleys Real Estate national commercial director John Church says.
“In January, hotel occupancy reached 92.15 per cent, the highest figure recorded for the town.
“In June, traditionally a low occupancy month, hotels recorded occupancy of just over 60 per cent, compared with 52.5 per cent a year earlier and just 49.4 per cent in June 2014.”
While concerns have been aired about a shortage of hotel accommodation, the report still detects a trend towards “both expansion and significant upgrades”.
It points to June’s opening of the 59-room Ramada hotel at Frankton’s Remarkables Park – Queenstown’s first new hotel in five years – and the scheduled construction start, early in the new year, of a Wyndham hotel nearby. It has 81 serviced hotel apartments with 98 beds and ground-floor retail units.
It could also have noted the pending construction of a 256-person Jucy Snooze backpackers in the CBD.
The report also refers to the 69-room QT-branded five-star hotel behind Rydges Queenstown, under construction, and Hotel St Moritz redecorating its 134 rooms to allow it to join the luxury accommodation market.
The report also delves into Queenstown’s retail explosion.
“Despite the rapid increase in retail space over recent years, strong demand for new retail space continues – as well as any vacant space within existing centres.”
In the CBD there’s almost zero vacancy, the report says, resulting in further upward pressure on rental levels, and ensuring retail growth is mainly taking place in the Frankton area.
Remarkables Park Town Centre and The Landing have been joined by Five Mile stage one and Mitre 10 Mega, while either in construction or planning are Five Mile stage two, Queenstown Central Ltd’s precinct, including Kmart, and Pak’nSave, which opens next month.
“Much of the retail development underway and planned is driven by the growth potential of tourism and visitor spending, as well as catering for local Queenstown residents and those in nearby centres such as Cromwell and Wanaka.”
Church notes: “Leasing and investment trends in Queenstown CBD for both prime and secondary retail spaces show demand is strong and supply is short.
“Prime retail can command up to $1800 per square metre in rent and a 4.5 to 5.5 per cent yield, while secondary can command up to $1000 per sq m in rent and 5.5 to 6.5 per cent yield.
“The picture is similar for the office and industrial sector.”
The report also says Queenstown’s industrial heart, in Frankton’s Glenda Drive, is largely full, but capacity’s emerging in the adjacent Shotover Park business and industrial precinct.
“Anecdotal reports in the commercial property sector indicate a sharp increase in land prices in Shotover Park over recent years due to the shortage of industrial-zoned land and growing demand pressures.”
The looming extension of Hawthorne Drive, linking Glenda Drive with Remarkables Park, is adding to buyer demand, the report says.
“Strong interest from both owner-occupiers and investors for good-quality industrial space is underpinning the growth in values.”