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Auckland CBD Apartment Market Report released

Auckland CBD Apartment Market Report released

After extensive research and analysis property market analysts Hybrid Group Ltd have produced an in-depth report on Auckland’s CBD Apartment Market revealing the good, bad and the ugly of this unique market.

The report considers this unique markets history, current status and future prospects.

Some of the key findings about Auckland’s CBD Apartment market include:

Of the existing 11,500 apartments approx 1,500 are vacant now.

Based on an average of 1.9 people per apartment there is the capacity for a further 2,850 occupants now.

Based on conservative estimates (taking into account generous additional occupant numbers and a conservative approach to the level of new buildings still under construction) we expect a consistent level of oversupply for the next few years resulting in a decrease in rents and values for most CBD apartments, except better located and top quality apartments.

The CBD has proven a volatile property market with periods of negative capital growth of @8% per annum in 1999, 2001 and 2005 but a period of strong positive capital growth from 2002 – 2004 of @10% - 15% per annum.

CBD apartment values have achieved inferior capital growth when compared to the rest of Central Auckland over the last decade. (CBD 10 year capital growth 62% versus Central Auckland Average of 106%)

Apartment developers operate in an ‘imperfect’ market with rapid swings in demand and a long lead-in time to plan, commence and complete apartments.

The trend of average tenancy terms for CBD apartments is declining. In 2003 the average tenant term was 19.2 months but today it is 10.4 months.

The short term view for Auckland’s CBD apartment market over the next few years looks grim but the longer term view looks sound now that minimum floor size restrictions apply.

This report is available free of charge from the Hybrid Group website www.hybridgroup.co.nz

ENDS

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