Commercial property has become increasingly popular with Mum and Dad investors, offering higher returns than residential properties.
There have been been price corrections of up to 25- 30 percent in some areas, Rethink Group said.
Photo: 123rf.com
Rethink Group chief executive Scott O’Neill said there were compelling reasons for investors to favour commercial over residential property, which had seen a cooling off in recent years.
However, he said deals were few and far between with many would-be commercial property investors chasing high-yielding opportunities.
“It’s a pretty tightly held market. There’s been price corrections of up to 25- to 30 percent in some areas, and that’s creating the value we see now,” he said.
“And obviously thousands of other investors are seeing the same value.”
He said the Property Council New Zealand’s 2024 report valued the commercial property sector at $350 billion with a forecast to grow to $399.5b this year, with an annual 3.72 percent growth rate through to 2029.
In contrast O’Neill said recent Real Estate Institute data indicated only a slight 1.7 percent rise in median house prices, but still down on the year earlier.
“More investors are moving towards long-term, stable returns in commercial property, with favourable lease agreements across multiple sectors, as highlighted in the New Zealand State of Commercial Real Estate Leasing Report 2024,” O’Neill said.
“In addition to these trends, factors like lower interest rates, tax advantages, and strong economic performance are driving investor confidence.
“For Australian investors, New Zealand’s market offers a seamless extension of their property investment experience.”
O’Neill said growth areas included the main centres and region hubs like Tauranga, Hamilton and Dunedin, which offered high yields at low entry costs.
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