Commercial property investor confidence on rise

Tauranga has eclipsed Queenstown in commercial property investor confidence for the first time in almost four years.

Colliers International's latest quarterly survey found overall investor confidence in New Zealand's commercial property sector reached a two-year high in the December 2018 quarter.

Nationwide confidence was at a net positive 26 per cent (optimists minus pessimists).

Tauranga/Mount Maunganui had the highest net positive score at 57 per cent, up 6 percentage points from 51 per cent the previous quarter.

Growing investor confidence in Tauranga signals the end of a stellar run in Queenstown, which has topped the survey for the last 15 consecutive quarters.

Queenstown dipped to net positive 46 per cent confidence, down 11 percentage points from 57 per cent the previous quarter.

Simon Clark, Managing Director of Colliers International Tauranga, says both Tauranga and The Mount are experiencing a major commercial property boom.

'Tauranga's CBD is undergoing a total revitalisation, with a lot of planned new development. We're seeing a lot of investor interest in the CBD as well as other areas in the city.

'This success comes down to Tauranga's population growth and the demographics of the people moving here. As wealthy households relocate in greater numbers to Tauranga, they're bringing their money with them and investing it in local commercial property.

'At the same time, we're seeing quite a broad mix of out-of-town investment. About 50 per cent of our commercial property investors are from outside of Tauranga.

'Aucklanders are in the mix, of course, but we're also seeing investor interest from all over the country, including the central and lower North Island, the South Island, and even overseas.”

Simon says Tauranga's market fundamentals remain incredibly positive.

'There's record low vacancy across all the key commercial sectors – office, retail and industrial – which is driving down yields and pushing up rents.

'Investors see Tauranga as being more affordable than Auckland but offering equally strong fundamentals and returns.”

Tauranga's residential market is also regarded positively in the latest Colliers International sentiment survey.

Eight out of 12 regions surveyed recorded a decline in the proportion of respondents expecting median house prices to increase from the previous quarter.

However, Tauranga/Mount Maunganui was one of only four centres to buck the trend, with a 3 percentage point increase in positive sentiment, to 47 per cent.

It ranked second behind Queenstown, at 50 per cent. However, the Otago tourist town's result is down from 60 per cent the previous quarter and an annual high of 69 per cent in the June 2018 quarter.

Colliers International's latest quarterly Commercial Property Investor Confidence Survey drew on 1,636 survey responses, while the Residential Property Market Outlook Survey drew on 5,962 responses.

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