Property: Small buyers squeezed by lemons

Sunday 27 June 2004

Numerous small commercial property punters are investing in a market they know nothing about, according to Ian Mitchell of DTZ Research.

By The Landlord

They were part of a group that had perhaps pulled out of the equities market and had turned to commercial property without necessarily understanding what made a good investment work, he said.

Their recognition of different levels of risk in yields was limited ­ they weren't getting the returns in relation to the risk they were taking, he said.

Not surprisingly, they became dissatisfied with their returns, basically because they had bought a lemon, and that wasn't a good outcome for the property market.

"They need to seek good professional advice. Potentially it could put people off investing in the property market and [stop] the property market from moving forward, which is the last thing we want to happen," Mr Mitchell said.

Investors' uninformed investment decisions were no good for anyone.

Meanwhile, DTZ's latest Wellington property market overview showed another feature of the capital's property investment market was the return of institutions and listed property trusts.

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