Confidence drops slightly

The level of confidence in the sector was a net positive 25% in the June quarter, down from 28% in March and 31% in December. A result of 0% would indicate an even split of investors feeling positive and negative.

Confidence is now at the same level reported last September.

Chris Dibble, Colliers International’s research manager, said there was optimism about the returns available from commercial property but investors were wary about interest rates.

“Investors are keeping a close eye on the impact that rising interest rates will have on their debt servicing capability and tenant cash flows.”

He said investors would need to focus on the underlying fundamentals of what they were buying.

Auckland investors were the most confident in the country, with a net positive 52%.

The next highest confidence was reported in Queenstown, at 48%, Christchurch, 41%, Tauranga, 36%, and Hamilton, 25%.

Only two of the 11 centres surveyed showed an increase in confidence in the last three months: Napier/Hastings and Palmerston North. Compared to the year before, Hamilton and Tauranga recorded increases.

Dibble said: “The growing number of commercial sales recorded over the last five years is likely to slow over the next year as investors become more discerning in their investment selection criteria, reducing the overall number of properties sold. However, this is unlikely to impact values, with properties that show solid passive returns of add-value opportunity still being chased by a growing pool of investors.”