Quarterly Index Results

Transcription

1 Quarterly Index Results NZ commercial property market results & launch of the Green Property Index IPD Australia and New Zealand 7 th November 2012 PCNZ/IPD Commercial Property Index sponsor: PCNZ/IPD New Zealand Green Property Index sponsors:

2 INDEX SPONSORS PCNZ/IPD Commercial Property Index sponsor PCNZ/IPD New Zealand Green Property Index sponsors 2

3 Outline New Zealand commercial property market Launch of the New Zealand Green Property Index Panel discussion 3

4 Outline New Zealand commercial property market Dr Anthony De Francesco, MD IPD Australia & New Zealand Launch of the New Zealand Green Property Index Panel discussion 4

5 IPD New Zealand asset property database broad representation across the property sector IPD NEW ZEALAND INDEX DATABASE Participants: 26 Portfolios: 31 PARTICIPANTS SIZE: 581 assets PORTFOLIOS VALUE: $11.2 billion AMP Capital Investors Arena Investment Management Auckland International Airport Ltd Augusta Capital Ltd Bayleys BMS Holdings Colonial First State Cooper and Company Dexus Property Group Dilworth Trust Board DPF Management Ltd DNZ Property Group Eureka Funds Management Goodman NZ Ltd Haydn and Rollett Manson TCLM Limited Ngāi Tahu Property Ltd Argosy Property Ltd PFIM Ltd Tainui Group Holdings The Neil Group Tower Trust Investments Vital Healthcare Management Ltd 360 Capital Property Group AMP Capital Property Portfolio (APP) AMP NZ Office Ltd (ANO) AMP Capital Shopping Centre Fund Arena Office Fund Argosy Property Trust (ARG) Auckland Airport Property Augusta Funds Management Ltd Augusta Capital BMS Holdings DXS Office Dilworth Trust Board Direct Property Fund DNZ Property Fund (DNZ) Cooper and Company Eureka Core Property Fund 3 Goodman Property Trust (GMT) Haydn and Rollett Kiwi Income Property Trust (KIP) Manson TCLM Limited Melanesian Mission Trust Board Ngāi Tahu Property Property for Industry (PFI) Rosalia St Johns College Trust Board TGH Property The Neil Group Tower Property Fund Trust Investments Property Fund Vital Healthcare Property Trust (VHP) 360 Capital Office Fund 5

6 asset value (NZD$Bn) Structure of IPD NZ property database dominated by listed property vehicles Size of IPD NZ property database estimated at NZ$11.2bn as at September % $1.7 Other Industrial Office Retail N $3.1 18% 20% $0.4 $0.4 $0.7 $1.8 $1.1 $0.9 $0.6 UWPF LPV Other Source: IPD Research. 6

7 Property investment return performance property return moves up with improved capital growth 25% Total return for direct commerical property rolling annual return on quarterly periods to September % 15% 10% 9.2% 5% 0% -5% Capital return Income return -10% Total return Long-run average -15% Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Note: direct property returns based on PCNZ/IPD Index. Source: IPD Research. 7

8 Property and the macroeconomy signs of improvement over the short-term 5% 4% 3% 2% 1% 0% -1% Economic growth versus NZ direct property annualised rates on quarterly periods ending September % 10% 5% 0% -5% -2% -3% GDP growth (lhs) -10% All property - capital return (rhs) -4% -15% Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Note: GDP series is seasonally adjusted and capital return series is expressed in real terms. Source: Statistics NZ and IPD Research. 8

9 Property returns across sectors retail sector outperforms while office sector struggles 16% Performance across core property sectors average annual return 14% 12% 10% 8% 6% 4% 2% 8.8% 9.2% 7.0% 7.1% 12.1% 13.3% 9.5% 9.6% 0% -2% capital return income return total return Jun-12 Sep-12 Jun-12 Sep-12 Jun-12 Sep-12 Jun-12 Sep-12 All Property Office Retail Industrial Note: direct property returns based on PCNZ/IPD Index. Source: IPD Research. 9

10 Regional performance across office Auckland outpaces competing markets 30% 25% 20% 15% 10% 5% 0% Total return for office sector by location rolling annual total return ending September % All Office Auckland CBD Office -10% Wellington CBD Office Other Office -15% Sep-94 Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Source: IPD Research. 10

11 Movements in property sector cap rates firming for industrial & retail sectors 11.0% 10.5% 10.0% 9.5% 9.0% NZ average direct property cap rates sample period: Sep Sep 2012 Favourable capital market conditions Lehman Bros collapse GFC Deteriorating capital market and space market conditions 8.5% 8.0% 7.5% 7.0% 6.5% Composite Industrial Office Retail 6.0% Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Source: IPD Research. 11

12 Direct property versus other asset classes direct property delivers strong return over the long-run 20% New Zealand asset class performance historical annualised total returns to September % 16.7% 16.2% 10% 8.2% 8.4% 7.0% 7.1% 9.2% 11.1% 9.9% 9.8% 7.5% 8.2% 5% 5.0% 3.4% 5.6% 0% -0.7% -5% 1yr 5yr 10yr 15yr 1yr 5yr 10yr 15yr 1yr 5yr 10yr 15yr 1yr 5yr 10yr 15yr Bonds Direct LPVs Shares property Source: NZX, EcoWin and IPD Research. 12

13 Direct versus listed property both property classes show a mild upwards movement 50% 40% 30% 20% 10% 0% -10% -20% Performance across NZ property asset classes annualised total return on quarterly periods ending Sep 2012 NZ listed property index -30% recession early 1990s Direct Property-composite -40% Direct Property-CBD Office -50% Sep-92 Mar-95 Sep-97 Mar-00 Sep-02 Mar-05 Sep-07 Mar-10 Sep-12 GFC Note: Listed series includes imputation. Source: NZX and IPD Research. 13

14 Global commercial property markets NZ property delivering a solid return against softening markets of UK and US 40% Return profiles for selected property markets annual return on quarterly periods, ending September % 20% 10% 0% -10% -20% -30% CAN JPN -40% UK US AUS NZ -50% IRE Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Note: direct property returns based on global IPD indices. Source: IPD Research. 14

15 Outline New Zealand commercial property market Launch of the New Zealand Green Property Index Mr Peter McGuinness, Research Manager IPD Australia & New Zealand Panel discussion 15

16 Datasets used to construct the Green Index merging property asset valuation and environmental rating data DATA PROVIDERS (building owners and fund managers) PROPERTY ASSET VALUATIONS RETURNS CAP RATE CAPITAL VALUE CAPEX NET INCOME ENVIRONMENTAL PERFORMANCE RATINGS GREEN STAR New Zealand Green Building Council Focused on new buildings Office Design (v1) Office Built (v1) GREEN INDEX ALL OFFICE (Rated vs Non-Rated) QUALITY (A-Grade) 16

17 IPD New Zealand property database asset exposure broadly represents investment industry GREE PROPERTY INDEX IPD NEW ZEALAND INDEX DATABASE SIZE: 582 assets VALUE: $11.4 billion Participants: 26 GREEN PROPERTY INDEX DATABANK SIZE: 16 assets VALUE: $1.3 billion Participants: 12 PARTICIPANTS WITH RATED OFFICE BUILDINGS IN GREEN AMP Capital Investors Arena Investment Management Auckland International Airport Ltd Augusta Capital Ltd Argosy Property Ltd Bayleys BMS Holdings Cooper and Company Colonial First State (KIPT) DEXUS Property Group Dilworth Trust Board DPF Management Ltd DNZ Property Group Eureka Funds Management Goodman NZ Ltd Haydn & Rollett Mansons TCLM Limited Ngāi Tahu Property Ltd PFIM Ltd Tainui Group Holdings Tower The Neil Group Trust Investments Vital Healthcare Management Ltd 360 Capital Property *Note: Sample differs from PCNZ/IPD NZ Commercial Property dataset. Not all data providers disclosed 17

18 asset value (NZ$Bn) Profile of Green Star rated buildings highest exposure held by private owners Green Star NZ office: rated vs non-rated based on asset values (NZD$ b) as at September 2012 non-rated rated 73% 27% $3.7 $1.3 $4 $3 $2 IPD NZ office database by rating tool and vehicle as at September 2012 $3.1 $2.8 Green Star Non Green Star $1.3 $1 $0.7 $0.4 Source: NZGBC & IPD Research. $0 $0.4 $0.2 $0.3 $0.8 LPV's UPF's Private/Other Source: NZGBC & IPD Research. 18

19 Returns for Green Star rated buildings rated buildings outperform all office & non-rated buildings 14% 12% 10% Green Star: returns for NZ office annualised 1 year returns to September 2012 capital return income return total return 8.9% 14% 12% 10% Green Star: returns for NZ office annualised 2 year returns to September 2012 capital return income return total return 9.6% 8% 7.1% 6.4% 8% 6.9% 6.5% 6% 6% 4% 4% 2% 2% 0% 0% -2% -2% -4% All Office Green Star Office Non-Green Star Office -4% All Office Green Star Office Non-Green Star Office Source: NZGBC & IPD Research. Source: NZGBC & IPD Research. Outperformance in Green Star buildings driven by positive capital growth 19

20 Cap rates for Green Star rated buildings rated buildings outperform all office & non-rated buildings 8.8% Green Star: cap rates for NZ office averaged over 1 year to September % Green Star: cap rates for NZ office averaged over 2 years to September % 8.6% 8.4% 8.3% 8.3% 8.4% 8.4% 8.5% 8.2% 8.0% 8.0% 8.2% 8.0% 8.0% 7.8% 7.8% 7.6% 7.6% 7.4% 7.4% 7.2% All Office Green Star Office Non-Green Star Office 7.2% All Office Green Star Office Non-Green Star Office Source: NZGBC & IPD Research. Source: NZGBC & IPD Research. Lower cap rate in Green Star buildings is consistent with positive capital growth and reduced investment risk 20

21 Returns for Green Star rated buildings rated A-Grade buildings outperform non-rated buildings across the quality spectrum 14% 12% 10% 8% 6% 4% 2% 0% -2% 9.5% Green Star: returns for NZ office annualised 2 year returns to September 2012 capital return income return total return 6.2% 6.9% 6.2% 9.2% 9.0% 8.8% 8.6% 8.4% 8.2% 8.0% 7.8% 7.6% 7.4% 8.0% Green Star: cap rates for NZ office averaged over 2 years to September % 8.8% 8.9% -4% A-Grade Office A-Grade Office B-Grade Office C-Grade Office Green Star Non-Green Star 7.2% A-Grade Office A-Grade Office B-Grade Office C-Grade Office Green Star Non-Green Star Source: NZGBC & IPD Research. Source: NZGBC & IPD Research. When controlled for asset quality, Green Star rated A-grade assets outperform non-rated A-grade assets A new asset grading paradigm is evident with A grade Green Star rated assets showing a lower cap rate and less investment risk than non-rated A-grade assets 21

22 Green Star rated A-Grade buildings Controlling for A-Grade, rated outperform non-rated buildings across investment metrics 12% 10% 8% 6% 4% 2% 0% -2% -4% Green Star A Grade: rated vs non rated average 2 year results to September 2012 All Office Green Star Non Green Star 9.5% $360 $366 $ % 8.1% 8.0% 7.0% 6.2% $56 $72 1.6% $7-0.9% -1.7% Net Income/sqm CAPEX/sqm Capital Return Cap Rate Total Return $600 $500 $400 $300 $200 $100 $0 -$100 -$200 Source: NZGBC & IPD Research. A higher total return for Green Star rated A-Grade buildings is consistent with stronger net income, lower capex, higher capital growth and a lower cap rate. 22

23 Total retrun Investment metrics across grades & ratings rated assets have an enhanced investment proposition 11.0% Rated versus non-rated office buildings 2yr annualised return and average cap rate to September % All Green Star 9.0% 8.0% A Grade Green Star 7.0% 6.0% A Grade Non- Green Star All Non-Green Star 5.0% 7.9% 8.0% 8.1% 8.2% 8.3% 8.4% 8.5% Cap rate Source: NZGBC & IPD Research. Green Star assets possess an advanced investment position with stronger returns and lower investment risk 23

24 Returns across grading spectrum rated buildings outperform prime and secondary grades 12% Green Star: return profile for NZ office annual return on quarterly periods to September % 8% 6% 4% 2% 0% Green Star Office Prime Office Secondary Office -2% Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Source: NZGBC & IPD Research. Green Star rated assets lead traditional prime and secondary segments through the recovery phase of the investment cycle Green Star rated assets introduce a new quality grade to the existing framework 24

25 Australian Summary remarks age cohort analysis Objective Examine if the outperformance of Australian Green-star and NABERS Energy rated building is being biased by building age. Approach Identify buildings by: Construction date Latest refurbished date Classified buildings according to age-cohorts: 0-3 years 0-5 years 0-7 years years Benchmarking analysis: Compare rated and non-rated buildings with 0-5 years construction or refurb date 25

26 Australian age cohort analysis for Green Star rated buildings 18% 16% Green Star rated all assets by age cohort annual returns to December 2011 capital return income return total return 14% 12% 10% 10.2% 12.1% 11.1% 12.4% 10.7% 11.7% 8% 6% 4% 2% 0% All office All GS All office All GS All office All GS All age constructed, 0-5 yrs full refurb, 0-5 yrs Note: All office sample excludes Green Star assets. Source: GBCA & IPD Research. 26

27 Australian age cohort analysis for NABERS Energy rated buildings 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% 10.2% 10.4% 9.2% All office NABERS Energy rated assets by age cohort All NE Stars annual returns to December 2011 capital return income return total return All age NE Stars 11.4% NE 4-6 Stars 10.7% 10.9% All office All NE Stars 7.8% NE Stars full refurb, 0-5 yrs 12.2% NE 4-6 Stars Note: All office sample excludes Green Star assets. Source: NABERS & IPD Research. NABERS Energy high-rated buildings outperform all office buildings fully refurbished over the last 5 years. 27

28 Key Summary findings remarks and next steps Key findings Returns for Green-Star rated office buildings outperform non-rated buildings when sample is controlled by asset quality Outperformance driven by stronger capital growth component Green star rated buildings show lower cap rates which imply less investment risk Key investment metrics support the finding of return outperformance Next Steps Segment returns by stars to understand how the various ratings perform Control for building age Gauge how OPEX profiles differ between rated and unrated buildings Cost-benefit analysis to understand which green star-rating performs best in terms of investment returns Capture and describe occupational productivity and link this with Green index findings Expand Green indices into other countries (South Africa, USA etc) 28

29 Outline New Zealand commercial property market Launch of the New Zealand Green Property Index Panel discussion Moderator: Ed Schuck Panel: Alex Cutler, CEO, New Zealand Green Building Council Mark Grant, National Director, Commercial Leasing, Jones Lang LaSalle Murray Barclay, General Manager, Property Services, Goodman 29

30 INDEX SPONSORS PCNZ/IPD Commercial Property Index sponsor PCNZ/IPD New Zealand Green Property Index sponsors 30

31 IPD Team Australia & New Zealand Anthony De Francesco Managing Director Peter McGuinness Research Manager Sanjeev Sahota Manager, Portfolio Analysis Mitchell McCallum Property Analyst Benjamin Wyburd Property Analyst Drew Slater Property Analyst Lachlan Wood Property Analyst Kimberley Slow Junior Property Analyst Daniel Gordon Junior Property Analyst Valerie Pontikakos Office Manager 31

32 Contact details Anthony De Francesco Managing Director Telephone: +61 (0) Mobile: +61 (0) anthony.de.francesco@ipd.com Peter McGuinness Research Manager Telephone: +61 (0) Mobile: +61 (0) peter.mcguinness@ipd.com IPD AUS/NZ Suite 3, Level 3, 275 George Street, Sydney NSW 2000, Australia Intellectual Property Rights and use of IPD statistics as benchmarks Whether in the public domain or otherwise, IPD's statistics are the intellectual property of Investment Property Databank Limited. It is not permissible to use data drawn from this presentation as benchmarks. Investment Property Databank Limited (IPD) Database Right, Investment Property Databank Limited (IPD) All rights conferred by law of copyright and by virtue of international conventions are reserved by IPD