Commercial

As residential property returns dwindle commercial property will rise

Investors are planning to add to their portfolios in the coming year but mainly outside residential property.

Tuesday, February 08th 2022

A survey of investors by independent economist Tony Alexander shows the most favoured assets for portfolio additions are shares either directly or through managed funds, exchange-traded funds (ETFs) and commercial property.

For the 15% of people looking to invest this coming year in commercial property, 49% will look for industrial or warehouse premises.

The next most favoured, and well back, is office accommodation at 9% of investors, alongside 9% who will look for retirement/rest homes.

“The latter is a growing sector as the population ages, and it is notable that advertising of such facilities looks to have increased in recent times along with construction of new premises according to data from Statistics New Zealand,” says Alexander.

Over the three months the survey has asked about commercial property, there are as yet no clear trends.

Globally, demand for industrial/logistics investments has been high for some time as businesses have moved to hold greater stocks of materials, and consumers have shifted towards more shopping online.

“We know from the past few decades there can be some large shifts in returns and preferences for different classes of commercial property assets.

“It will be interesting to see where the next shift will occur. When it does it will possibly be in the context of a changed world as we move away from a pandemic environment,” says Alexander.

He notes the sector is one in which sometimes there is excess construction which generates capital value changes unrelated to tenant demand.

Commercial property investment is often talked about as something more and more investors will shift towards as barriers are placed in the way of earning strong returns on residential property, he says.

The survey shows that for those investors looking at increasing their commercial property exposure, 44% intend doing so by buying property on their own. This is down slightly from 47% in November and 52% in October.

“This easing of self-ownership could reflect the strong demand for commercial property over the past two years, which in turn, has reduced availability at a price level accessible to many investors,” says Alexander.

Additionally, he says there are still challenges and changes underway resulting from the pandemic which inject an extra element of uncertainty to returns over the generally long period those buying property intend to hold their asset.

Residential property is still King to most investors. A gross 28% of survey participants plan to purchase residential property, which is unchanged from the previous two surveys.

Net residential property purchase intentions in fact rose to 10% in January, from 8% in both November and October.

Comments

No comments yet

Unity 6.99
Heartland Bank - Online 6.99
ICBC 7.05
SBS FirstHome Combo 7.05
China Construction Bank 7.09
Co-operative Bank - First Home Special 7.10
Wairarapa Building Society 7.15
Co-operative Bank - Owner Occ 7.30
Kiwibank Special 7.35
BNZ - Classic 7.35
TSB Special 7.39
China Construction Bank 6.75
Heartland Bank - Online 6.85
ICBC 6.85
Wairarapa Building Society 6.94
Unity 6.99
Westpac Special 6.99
Kiwibank Special 7.05
ASB Bank 7.05
BNZ - Classic 7.05
AIA - Go Home Loans 7.05
Co-operative Bank - Owner Occ 7.05
China Construction Bank 6.40
Westpac Special 6.49
ICBC 6.49
AIA - Go Home Loans 6.69
BNZ - Classic 6.75
ASB Bank 6.75
Kiwibank Special 6.79
SBS Bank Special 6.79
TSB Special 6.79
Co-operative Bank - Owner Occ 6.85
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Standard 8.40
Co-operative Bank - Owner Occ 8.40
Kiwibank 8.50
Kiwibank - Offset 8.50

More Stories

Apartment market takes a dive

Thursday, December 07th 2023

Apartment market takes a dive

Increasing constraints, including the cost and availability of credit, have meant a major slowdown in the apartment market. Consents dropped by 36% in the year to October – the lowest total since July 2017.

Auckland housing market rebounding

Wednesday, December 06th 2023

Auckland housing market rebounding

Wealthy Auckland buyers who can afford $2 million plus houses have returned to the market in force.

Tenant left with damages bill despite not being responsible

Tuesday, December 05th 2023

Tenant left with damages bill despite not being responsible

A woman who left a rented Manurewa, Auckland property she shared with her partner after discovering he was using methamphetamine is still liable for a half share of Tenancy Tribunal awarded exemplary damages and other debts owed to the landlord.

Private landlords should be included in bill – Property Brokers

Monday, December 04th 2023

Private landlords should be included in bill – Property Brokers

A big year is ahead for the property management industry.