The owner of Auckland’s Sylvia Park has lifted its operating profit to $126.2 million for the year, helped by a near full-occupancy portfolio and a stream of extra shoppers heading to the mall since Ikea opened its giant Swedish-flatpack store next door in December.
Kiwi Property Group, listed on the NZX as KPG, reported the result on Monday morning for the 12 months ended 31 March 2026. Net profit slipped to $50.4 million from $56.9 million a year earlier, dragged down by a $37.8 million fair-value writedown on the portfolio. The bottom line tells only part of the story, though, because the underlying business that pays the rent and runs the malls is in noticeably better shape than it was a year ago.
Revenue rose 2.9 percent to $271.4 million and operating profit before tax climbed 8.2 percent to $126.2 million. Net rental income, the cleanest measure of how the buildings are performing as cash machines, lifted 4.3 percent to $202.4 million. The board declared a final dividend of 1.4 cents per share, up from 1.35 cents last year.
The standout operational number is occupancy. Across the portfolio it now sits at 99 percent, compared with 96.9 percent a year earlier. For a landlord of large retail and office buildings, the gap between 97 and 99 is the difference between hunting for tenants and rationing space.
Chief executive Clive Mackenzie credited what he called disciplined execution and said the priorities for the year ahead were Sylvia Park’s southern enhancement project, the upgrade of the Vero Centre tower in central Auckland, and continued staged land sales at the Drury town development south of the city. “We will also continue to carefully manage operating costs and capital expenditure, while recycling capital from non-strategic assets where appropriate,” he told RNZ.
The Ikea effect has been one of the most-watched retail experiments of the past year. The Swedish chain opened its 34,000 square metre store in Mount Wellington in early December, directly across the road from Sylvia Park, after years of teasing a New Zealand arrival. Critics worried the warehouse-format giant would suck shoppers away from existing malls. The opposite seems to be happening for KPG. The company said foot traffic in the Sylvia Park precinct rose nearly 8 percent in the four months after Ikea opened, compared with the same period a year earlier.
That is consistent with what Kiwi Property told the market at its half-year update and with reporting from RNZ in early May showing that nearby homeware and furniture shops are the ones losing traffic, not the surrounding mall. Sylvia Park sells experiences, food, and apparel that Ikea does not, so an Ikea trip and a Sylvia Park trip have turned out to be complements rather than substitutes for many Auckland households.
Two large transactions are also reshaping the balance sheet. KPG sold The Plaza shopping centre in Palmerston North for $118.9 million during the year, exiting a regional retail asset that had become a poor fit for a portfolio increasingly tilted towards a smaller number of very large city assets. And the company is now awaiting settlement, expected in late May, of a $205 million sale of the ASB North Wharf office building at Auckland’s Wynyard Quarter. Together those two deals will deliver more than $320 million to recycle into the Vero Centre upgrade, the Sylvia Park southern wing, and the Drury build-out.
The total portfolio is now valued at about $3 billion, with the 0.9 percent fair-value decline reflecting a property market that has been broadly flat to slightly soft. That picture matches the most recent Reserve Bank commentary that commercial property values are stabilising after a sharp repricing through 2024 and early 2025 as the Official Cash Rate stayed elevated. Listed property trusts that hold high-quality city assets with long leases and credit-tenant covenants have weathered that adjustment better than smaller regional players or developers carrying construction debt.
Drury, the master-planned town in the southern Auckland growth corridor, remains the long-game bet. KPG has been selling parcels of land into the development in stages rather than financing the whole build itself, a strategy that limits balance-sheet risk while still allowing the company to capture future uplift as the area densifies. Mackenzie said the company will continue that staged approach into 2027, with sales pegged to demand from residential and large-format retail buyers.
Investors took the result cautiously. KPG shares closed at 91 cents on Monday, down about 3.2 percent on the day, although the stock is still slightly up over the past 52 weeks. Analysts have generally treated KPG as a steady income stock rather than a growth play. With a portfolio yield around 7 percent on book value and a property book that is now 99 percent occupied, that thesis looks reasonably intact heading into the new financial year.
The other major piece of KPG’s portfolio worth flagging is The Base in Hamilton, the Waikato region’s largest shopping centre. Mackenzie did not single it out for major capital investment in this update, suggesting management considers it a steady cash generator rather than a near-term growth project, with the bulk of incremental capex going into the two Auckland assets and Drury.
For ordinary New Zealanders watching the listed property sector, the takeaway is mixed but mostly encouraging. Rental cashflows are growing again, big city malls have more tenants than they can fit, and the arrival of Ikea has not been the retail apocalypse some predicted. The drag is still property valuations, which remain under pressure even as the operating businesses inside the buildings improve. If the Reserve Bank starts cutting more aggressively later in the year, those valuations could turn from headwind into tailwind very quickly.
What do you think of the Ikea effect on Auckland retail, and is Kiwi Property’s recycling strategy the right call for a $3 billion portfolio? Share your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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