Australian commercial property buyers agency expands into NZ

Wednesday, 10 July 2024

Australian commercial property buyers agency, Rethink Investing, has expanded into New Zealand as it sees potential in the market.

Changes in the commercial property landscape have led one of Australia’s biggest buyers’ agencies to expand into the New Zealand market.

Rethink Investing, which has bought $4.25 billion of property for its clients over the past eight years, and has 3750 clients, officially launched its New Zealand arm last month.

At this point, the company does not have a physical office, but it has several local agents, who will be overseeing the operation from different parts of the country, in place.

Buyers agents work on behalf of a buyer and are paid by the buyer. They find properties for them based on a brief, do due diligence on properties, and bid at auctions and negotiate with sellers on their behalf.

While there are some buyers agents working in New Zealand, they are not as common as they are in the United States, where their services are routinely used, or even Australia.

Rethink Investing NZ acquisitions specialist Dylan Menzies said the lack of buyers agents was one of the reasons for the company’s move into New Zealand.

Reserve Bank governor Adrian Orr still believes inflation will drop to usual levels towards the end of 2024.

“Australia is moving in the direction of the US, particularly with commercial property, and we think that’s the future for New Zealand too, so we want to be in the forefront of that wave when it eventually comes.

“We have a 60% market share in Australia, and we can leverage off our head office’s experience, industry track record and methodology to be the first at-scale commercial property buyer’s agency here.”

But the expansion was also prompted by the belief the country’s commercial property market offered opportunities for investors, particularly given tax policy changes and a more property-friendly Government, he said.

“The country's stable economy provides a robust foundation for investment growth, ensuring a favourable environment for long-term financial stability.

“It is also moving through the interest rate cycle a bit quicker than Australia, and so the potential for a rate drop and high returns on investment looks better.”

There was increasing international interest in the market, but Rethink’s focus was on domestic buyers and educating on the potential of commercial property, he said.

“Kiwis tend to have a focus on residential property, which is a natural inclination because they know and understand it.

“But commercial properties offer attractive returns, typically higher than residential investments, and that makes them lucrative options for investors seeking substantial income.”

Traditionally, the entry level cost of commercial property has been off-putting for many, but it is often lower than people think, he said.

Despite the economic climate, there are interested buyers out there, Rethink Investing NZ’s Dylan Menzies says.

“A commercial property investment doesn’t need to be a huge property. There are good opportunities to buy in the $500,000 up to $1 million range, and $1m is around the cost of a house in Auckland these days.”

Menzies is Northland based but worked in Australia for many years. He has a background in commercial property development, project management and civil engineering, and is managing director of Cameo Capital.

Under the traditional buyers agent model, one buyer’s agent did everything for their clients, but Rethink did things differently and was split into three divisions, he said.

Those divisions were client handling, where an agent “held the hand of” a client through the whole process, including finance; deal finding; and due diligence, where a team worked to identify any problems in potential deals.

His focus would be on finding good property deals around the country, and across different sectors, for Rethink’s clients, he said.

“Our due diligence principles mean we stay away from very small towns, but there are areas like Nelson, Tauranga, New Plymouth, Taupo where there are some great opportunities. Even in a city like Auckland you can find good deals.”

“Around 60% to 70% of our deals are off-market, and come after we are approached privately by a seller, developer or agent.”

Despite the current economic climate, he was positive about the scope for growth, especially as busy people realised the advantages in getting experts to do property work for them, he said.

“There are interested buyers out there. We’ve only been open here for a few weeks, and we’ve had a good response. We have four to five properties nearly under contract, and more people waiting in the wings.”

Rethink is not the first international property related company to see the New Zealand market as attractive enough to warrant an expansion in recent times.

Australian real estate giant, Raine & Horne, launched its local offering early last year, and subsequently ramped up its presence by acquiring the Mike Pero Real Estate network.

Hines, a global real estate developer and fund manager, also set up shop in New Zealand in the middle of last year.

Rethink Investing was founded by Australian Financial Review young rich listers Scott and Mina O’Neill in 2014.

The O’Neils started investing in 2010 with a A$60,000 (NZ$66,000) deposit, and have built a commercial and residential property portfolio worth A$80 million.