New Zealand Real Estate Trends: Developments and Market Shifts

Significant Growth in NZ Data Centre Investments

New Zealand’s data centre capacity is set to double, with over 20,000 additional racks expected by 2025. Auckland leads this expansion, accounting for more than 150MW of the upcoming facilities. International investors are actively engaging in this growth, positioning New Zealand as a key market for data infrastructure. Additionally, Goodman has raised AUD4.4 billion to support large-scale data centre expansion, underscoring the sector's strong investment outlook. (Sources: GlobeNewswire, NBR)

Innovative Sustainable Practices

Spark is developing a sustainable data centre on Auckland’s North Shore, integrating excess heat reuse to warm a nearby surfing lagoon. Additionally, the facility will feature a seven-hectare solar farm, demonstrating a strong commitment to renewable energy solutions. (Source: Data Center Dynamics)

Strategic Investments by Industry Leaders

Industry leaders anticipate that New Zealand’s data centre growth will mirror Sydney’s trajectory, attracting international investment in renewables to support increasing power demands. (Source: RNZ) This aligns with international trends, where sustainability concerns and power constraints were highlighted as major barriers to data centre expansion in global markets.

Streamlined Foreign Investment Processes

The Overseas Investment (Build-to-Rent and Similar Rental Developments) Amendment Bill introduces a ‘large rental development test’, simplifying the consent process for overseas investors acquiring existing BTR properties with 20 or more dwellings. This regulatory shift aims to expand quality rental housing supply and attract foreign capital. (Source: Beehive)

Market Confidence and Growth

By facilitating easier exit strategies for developers, the new legislation is expected to boost BTR project initiation and strengthen rental market stability. (Source: The Lawyer Magazine) From an international perspective, we have seen similar policy movements across major markets, with governments in the UK and Australia also adjusting investment rules to stimulate institutional participation in BTR developments.

Major Capital Raising by Ryman Healthcare

Ryman Healthcare, New Zealand’s largest retirement village operator, has launched a NZD1 billion equity raising initiative to reduce debt and expand aged care facilities. This move strengthens financial stability and supports further development in the sector. (Source: NZX)

Growing Demand for Retirement Villages

With an aging population, demand for retirement villages and aged care facilities continues to rise. However, supply struggles to keep pace, highlighting investment opportunities in the sector. (Source: JLL NZ)

Additional Developments in Purpose-Built Student Accommodation (PBSA)

Cedar Pacific has topped out a major PBSA development in Auckland. Other PBSA projects are in the pipeline, indicating growing investor interest in purpose-built accommodation.

Our recent DLA Piper International Real Estate Summit reinforced global trends we are seeing across all asset classes, particularly the shift in investment strategies driven by economic uncertainty, sustainability considerations, and changing occupier demands. Below are the implications in the New Zealand market:

Office:

Office vacancy rates are increasing, except for premium-grade spaces that continue to perform well. (Source: The Post)

Industrial:

The industrial real estate sector in New Zealand is set for a strong rebound in 2025, driven by renewed investor confidence following monetary easing by the Reserve Bank. In Auckland, industrial vacancy rates remain low at 2.1%, with prime warehouse rents increasing to USD194 per sqm. (Sources: Colliers, JLL) Internationally, we are seeing similar patterns, with logistics and warehouse spaces remaining in high demand as e-commerce continues to shape industrial asset strategies.

Hotels & Retail:

• Private equity investment in hotels is increasing, with the sector recognized as a key asset class rather than a secondary investment.
• Leisure travel demand and MICE (Meetings, Incentives, Conferences, and Exhibitions) growth are driving investment, particularly in prime tourist destinations. Our Real Estate Summit discussions highlighted that investors are prioritizing premium offerings and strategic locations to navigate market volatility and sustainability pressures.