Queenstown property market resilient
Queenstown’s property market has changed significantly in the wake of the global Covid-19 pandemic but has proved remarkably resilient, with confidence growing again and big infrastructure spending in the pipeline.
That is according to Colliers International’s newly released Otago Market Review and Outlook 2020-2021, which covers the key markets of Queenstown, Wanaka, Cromwell, and Dunedin.
Heather Beard, registered valuer and consultant at Colliers Queenstown, said the fundamental driver of Queenstown’s growth has been tourism, now impacted by the border closures and economic uncertainty with questions remaining around when international tourism may resume.
‘‘However, the Queenstown property market has proved to be remarkably resilient with current market sentiment and council population growth projections showing confidence in Queenstown’s longerterm prospects,’’ said Beard.
In June 2020, the government announced $85 million in funding for shovel-ready projects in Queenstown with particular focus on much-needed infrastructure projects which will assist in recovery and further growth following the international border re-opening.
‘‘The government investment into Queenstown infrastructure will be key in the region’s recovery. Ongoing construction of infrastructure and other building projects will add to other key drivers such as economic and population growth.
Beard said some overall market trends include low interest rates driving property investment, as investors seek returns, and a negative OCR predicted from early 2021.
‘‘Currently strong investment returns with the low interest rate environment. While there is currently some downward pressure on residential rentals, investors expect that over the long term these will return to previous levels.’’
In Queenstown’s commercial property market, Beard said that rental affordability has been a hot topic with the absence of international tourists in the CBD but the industrial sector remains a soughtafter investment in Queenstown and nationwide, as investors gravitate towards essential business tenants.
‘‘New leasing activity appears to be at pre-Covid levels and demand in the prime retail area is continuing, with some tenants taking the opportunity to reposition or enter the market.
‘‘Queenstown prime retail in the CBD is generally a tightly held area with nil vacancy over an extended period. Demand in this sector continues to be strong.’’
Despite the significant impact of Covid-19 on tourism, work continues on the hotel supply pipeline: two new CBD hotels have recently been completed while four further hotels are under construction and one has been put on hold. Queenstown’s hotel supply is now 3831 rooms, with a further 569 under construction, 2460 consented and 1481 in the consent process.
‘‘Prior to Covid-19 the Queenstown tourist accommodation sector had strong tariff and occupancy levels with 100 per cent occupancy common over peak periods. As such many developments were in the pipeline based on these strong market indicators making this type of development viable,’’ said Beard.
‘‘Anecdotally, once the borders re-open there is an expectation that tourism could return to these previous strong levels and continue on a similar growth trajectory.’’
‘‘Overall, I think the sentiment in Queenstown is that the property market is very resilient and longerterm investors have confidence in the Queenstown property market.’’