Confidence plummets in property
The Covid-19 pandemic has knocked the wind out of the commercial property sector’s sails well before the national lockdown started, a survey shows.
Colliers International’s latest quarterly survey of the sector’s confidence reveals that optimists, in the first half of March at least, outnumbered pessimists, but only by 7 per cent, down from 27 per cent in December last year.
The survey used 1456 responses to get its results and was taken from March 4 to March 12, two weeks before the national lockdown started on March 26 to prevent further spread of the coronavirus Covid-19.
Several regions were more pessimistic about the fortunes of commercial property than the national average, including Rotorua, Palmerston North, NapierHastings, and Christchurch, where pessimists dominated.
When asked in December what could have the biggest negative impact on the commercial property market in 2020, the most common response included tightening in bank lending.
In the March 2020 survey, more than two-thirds of respondents indicated that impacts from Covid-19 were the big concern, Colliers said.
The commercial property sector’s confidence fell dramatically in our largest city, Auckland, to 10 per cent positive from 39 per cent in December 2019. The result is calculated by subtracting pessimists from optimists.
In Wellington, confidence held up a bit better at 14 per cent positive, down from 42 per cent in December.
Big tourist town Rotorua was the most pessimistic at negative 16 per cent, down from 9 per cent positive in December. Queenstown, usually top of the pops for confidence, slipped well down to 15 per cent positive from 50 per cent in December.
In Tauranga-Mt Manganui the commercial property sector remained buoyant at 33 per cent positive, the most optimistic area, but down from 50 per cent three months ago.
And similarly Hamilton, down to 23 per cent positive from 44 per cent in December, was not as gloomy as negative 7 per cent in Palmerston North.
In the ‘‘Garden City’’, where the commercial property market is stabilising
Leonie Freeman
after the earthquakes, views were unchanged from December at minus 3 per cent.
Meanwhile, the Property Council of New Zealand is calling for property owners, tenants and the Government to support the sector, facing hundreds of millions in lost revenue and increasing the risk of stalling the economy. Its members own and manage about $50 billion of property.
‘‘Support for property owners and tenants could be a targeted subsidy or another form of support package. The next three months will be critical to keeping the economy moving,’’ council chief executive Leonie Freeman said.
The council members were also looking for rates relief from local authorities, and were asking them to reconsider proposed rate rises.
‘‘The ramifications of letting property owners bear the brunt of this crisis are dire,’’ Freeman said.
‘‘There’s little point in having a tenant survive with the landlord foreclosed on and vice versa. We must work together to get through this period of unpredictability.’’
‘‘The ramifications of letting property owners bear the brunt of this crisis are dire.’’