Buying commercial property
It is relatively easy to buy commercial property in New Zealand, either as an investment or as a base for your own business.
Commercial properties are widely available. Options include:
- Offices in all shapes and sizes, anything from either a single floor or suite in a larger building, to entire buildings
- Light industrial units, warehouses and showrooms from a few square metres to 3000+
- Heavy industrial premises
- Retail premises, usually small, sole-operator premises although entire shopping centres occasionally come onto the market
- Development projects, including major residential or retirement complexes and tourism enterprises.
In many cases, commercial property can be purchased with tenants – and leases - in place.
In New Zealand tenants are liable for repairs, and often decorate. They are also usually liable for utilities, rates and insurance. This can mean a better net return for the commercial property investor in New Zealand.
Finding a commercial property
Most of the larger real estate agencies that deal in residential properties also offer commercial property listings and usually have specialist staff to handle these properties. There are also a number of specialist commercial property agencies that can provide leasing, sales, management or advisory services.
Assessing the property
As with all investments, you should take professional legal and financial advice. Your professional advisers will also be able to inspect the premises if you are not able to do it yourself.
As part of your assessment, it is important to obtain a Land Information Memorandum (LIM). This is a comprehensive report containing everything the local council knows about a property or section.
The contents LIMs vary between different local councils, but generally include information about:
- Special land features including potential erosion, avulsion, falling debris, slippage and possible hazardous substances
- The permitted uses of the land. Zoning and council restrictions may prevent you from using the building in certain ways, so find out about any restrictions before making the decision to purchase
- Private and public storm water and sewerage drains
- Unpaid rates
- Consents, certificates, notices, orders or requisitions affecting the land or buildings
- District Plan classifications that relate to the land or buildings
- Any information relating to the property supplied by network utility operators.
The options for buying a commercial property in New Zealand include:
- Buying as an individual
- Buying as a partnership
- Buying through a company
- Buying through a trust.
Your professional advisers will help you decide which option or business structure is best for your circumstances.
Buying the property
Before you make any offer on the property consult your lawyer.
Your lawyer and the real estate agent handling the sale will be able to help with the offer to purchase and the terms and conditions of a tenant’s lease.
Your lawyer can also advise you on relevant tax matters such as whether you’ll need to pay the 15% Goods and Services Tax (GST) on the property.
When making an offer, make it subject to certain conditions, such as arranging finance, and approval of the terms and conditions of a tenant’s lease. The property doesn’t change hands until your conditions have been met, by an agreed date. No one else can buy the property provided you meet the conditions by the agreed date.