Commercial investors don’t seem rattled by capital gains tax

Commercial property investors remain positive about the market despite the potential impacts of a proposed capital gains tax, according to a quarterly confidence survey from Colliers International.

The company’s research and communications director, Chris Dibble, says this shows a net positive 22 per cent (optimists minus pessimists), of respondents expect investment conditions to get better over the next 12 months.

“This is broadly in-line with the last four quarters,” says Dibble.

The survey, which has about 1600 responses, was taken while the merits of a capital gains tax denominated the news. It coincided with the release of Tax Working Group Future of Tax report, whose suggested reforms included a CGT. But no distinguishable shift in trends was recorded during the survey period; 10 out of the 12 regions surveyed recorded a net positive score.

“While the Tax Working Group’s recommendations could have farreaching impacts for the commercial property sector, if implemented, our survey shows investors remain broadly positive about conditions in the year ahead,” says Dibble. He says the working group recommendations are only proposals, and — even if they became reality — any tax changes wouldn’t be introduced till 2021.

● Queenstown remained the top spot for commercial property investor confidence, eclipsing Tauranga/ Mt Maunganui in the previous quarter. It recorded a net positive 52 per cent — up 6 percentage points on the December 2018 quarter. Otago managing director, Alastair Wood, says population and tourism growth is still underpinning confidence within the Queenstown commercial market.

● Tauranga/Mt Maunganui was just 1 percentage point behind Queenstown, recording a net positive

51 per cent. Tauranga MD, Simon Clark says 2019 started with a real bang. “We’re seeing record prices for quality investments, with yields in the

4 per cent to 5 per cent range being achieved from investors from all over the country.”

● Wellington took out third place in the survey overall, with a net positive 43 per cent, followed by Auckland (32 per cent) and Hamilton (30 per cent). The office sector was the standout in the capital, where tenant demand remains high and vacancy rates are low, despite premium new stock coming on to the market.

Wellington MD, Richard Findlay, says the Wellington office and industrial markets are continuing to tighten with vacancy rates across both

sectors at historically low levels.

● Napier/Hastings had a standout result with a net positive 24 per cent – the highest on record since the survey began almost a decade ago. The result was up 9 percentage points on the previous quarter, and 14 percentage points up on the same time last year.

● Christchurch recorded a 15 per cent net negative score, with pessimists outweighing optimists. However, 45 per cent of respondents in both the office and retail sectors were neutral, indicating they expect current positive investment conditions to remain steady.