Downtown goes up

Property Council figures issued yesterday show commercial property investors received their highest returns in the year to June since the council started using its Investment Performance Index in 1989.

New Zealand composite property returns rose to 18.13 per cent from 14.62 per cent last year, with capital growth of 8.07 per cent compared with 5.02 per cent and rental income returns of 9.49 per cent versus 9.26 per cent.

Office space in the Wellington central business district was the standout performer in the latest quarter, returning 24.57 per cent, almost double the 13.82 per cent return the June 2004 quarter. Capital returns in central Wellington rose to 12.72 per cent from 3.21 per cent.

Property Council national director Connal Townsend said council members overwhelmingly cited growth in the public service as the key driver.

"Particularly the expansion over the last term of office of the Government," he said.

"It has been extremely good for our investors in Wellington."

Since the Labour-led Government came to power in 1999, the core public service has risen from 30,000 to 38,000. Labour says the sector has grown as the economy has expanded but National sees scope to reduce the bureaucracy to help finance its tax cuts.

With the election looming, Mr Townsend said the Property Council would not voice an opinion. "But it would have to be said they (council members) have been very pleased with the expansion in the public service in terms of bottom-line results".

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