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NZ commercial real estate returns highest since 2008
New Zealand commercial real estate returns highest since 2008
The Property Council New Zealand/IPD New Zealand Quarterly Property Index Q3 2015 results have been released.
The results, announced at a Property Council event in Auckland today, show a total return of 12.6% for the year-ending September 2015. This was comprised of 7.5% income return and 4.7% capital growth.
The all property return for New Zealand is at its highest level since the March 2008 quarter; the market leader being the industrial sector with a return of 13.1% over the 12-months to September. Over the same period, retail assets returned 11.6% and office assets returned 12.7%.
At a regional level, Auckland continues to outperform Wellington with total returns of 13.5% compared to 10.1%. Office returns in particular have been a difference driver between the two cities with Wellington offices underperforming Auckland offices over recent quarters.
Property Council chief executive Connal Townsend says the returns indicate a very high level of confidence in the commercial property sector.
“Commercial property sector has been delivering strong returns for a while now, and should be recognised for the role it plays in the overall economy. It provides jobs, prosperity and is integral to building successful cities.
“We are very pleased to see these returns and as advocates of regional New Zealand, we want nothing more than for places like Wellington and Christchurch to pick up and produce stronger returns.”
Revaluations for the September quarter were low at 15.3% for all assets. Due to the low levels of asset revaluations in the sample it is important that users are fully aware that the risk of stock specific circumstances disproportionately impacting sector and even all property returns is high. The figures should therefore be treated as only indicative of market performance and should be considered within that context.
The PCNZ/IPD New Zealand Quarterly Property Index consists of 28 contributing funds with a combined asset value of $13.2 billion held in 573 investments.
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