IPD Index $7 Billion In Value And Growing!
Property Council / IPD Index $7 Billion In Value And Growing!
The latest figures from the Property Council / IPD of New Zealand’s Investment Performance Index survey show commercial property investors receiving an average return of 22.3% in the year to September 2007, well up on the 19.0% investors earned on average for the previous year, and well ahead of the return from Bonds on 3.9%.
"These results indicate the continuing strength of the market. Commercial property investors are receiving outstanding returns.
However, as predicted last quarter, total returns on a rolling annual basis are slightly down. This reflects our current market experience. Investors are a little more cautious, waiting to see if the growth enjoyed in recent years will carry on in 2008, or if the negative sentiment surrounding credit issues is reflected in reduced capital gain.” says Colliers International corporate services director Alan McMahon, who is chairman of the PCNZ/IPD Index Governance Committee.
All sectors showed increased returns compared to the previous year, and NZ Retail and NZ Other Retail reached their all time high.
Wellington CBD Office took over the top spot this quarter, reaching a total return of 26.6% (well up from 22.5% in September 2006). While the income returns for this market has dropped slightly over the last 12 months, the increase in total returns has been driven by a significant increase in capital return over the same period, from 13.0% in September 2006 to 17.5% in September 2007.
Both New Zealand retail and office markets were fractionally down on last quarter but with still solid returns of 23.9% and 25.6% respectively. Retail shopping centre returns being the greatest contributor to this reduction in retail returns coming off a record high of 31.1% for the June Quarter to 24.5% for the September Quarter.
Auckland CBD office recorded an annualized September return of 24.4% virtually unchanged from the previous quarter. New Zealand Industrial market returns remained steady at 16.1%.
IPD Head of Operations Roman Matruglio noted that the dip of composite property returns from the 18 year high levels recorded for the year to June 2007 was more of a result of valuation lag issues then market conditions. “Historically”, he continues, “the September quarter, like the March Quarter, has one of the lower proportions of updated valuations included in the sample.
This is again the case and is the main reason for the softening in returns. That said, all assets in the index have been valued in the last 15 months.”
Results including a downloadable flyer are available on IPD website www.ipd.com. The Investment Performance Index is New Zealand’s leading benchmark of commercial property investment returns. The figures are based on analysis of 292 properties, at a total value approaching 7 billion dollars and covering over 2.39 million square metres of net lettable area.
INVESTMENT PERFORMANCE INDEX RETURN SUMMARY – September 2007 Total return Income return Capital growth New Zealand composite 22.3 8.1 13.2 New Zealand retail 23.9 7.7 15.1 New Zealand CBD office 25.6 8.0 16.4 New Zealand industrial 16.1 8.5 7.1 NOTES: 1) The "New Zealand Retail" market includes all properties in the "New Zealand Shopping Centres", "New Zealand Bulk Retail" and "New Zealand Other Retail" indices. 2)
"New Zealand Composite Property" is a weighted average of the CBD Office, Non CBD Office, Industrial and Retail sectors. 3) The "New Zealand Other Retail" market includes retail strip shops, shopping centres and other retail stores that fail to meet the NLA size requirements for either the "New Zealand Shopping Centres" or "New Zealand Bulk Retail" indices. 4) The “New Zealand Non CBD Office” has been removed due to falling sample sizes in properties providing reports outside the Auckland area.
Total Returns 12 Months Ending 30 September 2007 0 5 10 15 20 25 30 Wellington CBD Office NZ CBD Office NZ Shopping Centres Auckland CBD Office NZ Retail NZ Composite Property NZ Bulk Retail NZ Other Retail NZX All Ordinaries Auckland Non CBD Office NZ Industrial Auckland Industrial NZX Property Index Bonds % About the Property Council New Zealand (PCNZ)
The Property Council is New Zealand’s property voice, a professional association that represents members who have a vested interest in commercial property. PCNZ actively involves itself with central, local and other government associated bodies, promoting the views, goals and ideas of our members. Membership is broad, including owners, managers, builders and investors of commercial property in New Zealand. Collectively, members own and manage a $24 billion commercial property investment in New Zealand.
Members are committed to ensuring the continued growth of New Zealand's economy to help create a vibrant commercial property market. About IPD IPD commenced its New Zealand service in March 2006, operating out of its office in Melbourne. IPD have entered into an agreement with the Property Council New Zealand assuming responsibility for the generation of indices for the New Zealand market.
In addition to indices, IPD provides benchmarking services for a variety of direct investment vehicles (Wholesale funds, Superannuation and Pension funds, Property Syndicates), and indirect vehicles (Listed Property Trusts). These services are similar to those provided in other countries with the only material differences being the extent to which data is provided, and the initial offering of IPD’s new vehicle level analytics. The IPD New Zealand Databank covers over 330 investments with a value of around NZ$7.5 billion.