Survey reflects sound market fundamentals
New Zealand investors remain broadly positive about the commercial property market, which a top Colliers International expert says is due to sound market fundamentals.
The latest quarterly investor survey from Colliers International, released last week, shows confidence in the New Zealand commercial property market remains positive at 24 per cent.
Colliers International Research and Consulting National Director Alan McMahon says that result i s down from 32 per cent the previous quarter.
However, he says the net positive result means a significant majority of those who think the market will change are optimistic.
“New Zealand market fundamentals are sound, with demand for offices, shops, and industrial property remaining steady to strong across the country,” McMahon says.
The top commercial property market for investor confidence i s Queenstown ( 67 per cent positive), which has held the top spot for the last seven quarters. The tourist hot spot is followed by Tauranga/ Mt Maunganui ( 56 per cent), Auckland ( 47 per cent) and Hamilton ( 41 per cent), all of which have remained in the top four for the third quarter in a row.
“Centres with good growth in resident or visitor numbers, which boosts demand for all property types, tend to have higher confidence,” says McMahon.
The survey results also reveal a divide between two of our largest cities as they recover from significant quake damage. While commercial property investors remain optimistic about the Wellington market, they are now more negative about Christchurch, where investor confidence has dipped to its lowest point since Q1 2011, which coincided with the February 2011 earthquake. Confidence is at 2 per cent, down from 15 per cent in the last quarter.
Colliers International Christchurch General Manager Mark Macauley says despite the drop, the Christchurch commercial property market remains strong.
“We’re positive about the current market. Investors are definitely still seeking properties and we’re getting good enquiry numbers.”
In Wellington, by contrast, confidence has grown despite November’s magnitude 7.8 earthquake, which reduced available office space by 7 per cent. Overall confidence is at 29 per cent, up from 22 per cent in Q4 2016.
Optimism in the capital’s office sector has reached a record high, with confidence at 39 per cent — the most positive result since the survey began in 2006.
Colliers International Wellington Managing Director Richard Findlay says the up- tick in confidence comes amid a crunch on office space.
“We are experiencing an accelerated development cycle with unsatisfied demand for quality and resilient office space. With overall office stock reduced due to quake damage, our prime and A- grade office vacancy rates are at an all- time low.”
Colliers International Otago Managing Director Alastair Wood says he is pleased with Queenstown’s topranking result in the confidence sur- vey, saying it reflects the sentiment in the region’s property market.
“Strong growth in both tourist and resident numbers has energised commercial investment and construction activity, with an excess of $ 400 million of construction currently underway in both the private and public sectors.”
Colliers International Tauranga Director Simon Clark is also pleased with his city’s high confidence rating. “It’s indicative of the continued population growth we are experiencing, and the growth in all sectors of the market to cater for these new residents moving to our city.”
Colliers International Hamilton Commercial Sales and Leasing Director Mark Brunton says his city’s topfour ranking is pleasing, but he notes the market has eased marginally from record levels in 2016.
“Our feeling is that bank- imposed lending restrictions are behind a large portion of this easing. However, prime investment properties remain unaffected by this slight easing. We’re also particularly confident about land and development orientated projects.”
The Commercial Property Investor Confidence Survey, conducted in March by the Colliers International Research and Consulting team, was based on 2299 responses.