Interest's bite eats into AMP

Thursday 5 August 2004

Rising interest rates are beginning to hammer the listed property sector with the head of the second-largest real estate conglomerate predicting wholesale writedowns.

By The Landlord

Last year, AMP NZ Office Trust revalued its portfolio up $21.6 million but yesterday said it had revalued buildings up only $11.75 million, which executive manager Rob Lang attributed to increasing caution due to interest rate rises.

But after taking into account other expenses such as property acquisition and disposal costs, the trust devalued its portfolio by $268,000.

"Interest rates are clearly having a dampening effect on property prices because they are a key component of the valuation process," Lang said, announcing a net surplus after tax and before revaluations of $34.3 million, only marginally up on last year's $34.2 million.

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