Commercial property market on the up, but pace of recovery slowing

The Property Council/IPD New Zealand Property Index results are out and show that while the commercial property market is still recovering, the pace of recovery is slowing.

For the year ending March 2011, the index recorded a total return of 5.9%, a substantially lower return against the long-run return of 10%.

The total return comprises 8.3% income return and -2.2% capital growth.

Property Council chief executive Connal Townsend said the results would give investors some degree of confidence of a slow, steady recovery.

Managing director of IPD in Australia and New Zealand Anthony De Francesco said various macroeconomic indicators, such as employment growth and retail sales growth, supported the results’ suggestion that the market was moderating.

“[These indicators] are pointing towards a soft economic outlook over the short-term.”

Mr De Francesco said the speed of recovery would vary across sectors, with the industrial sector outperforming retail and office due to relatively favourable market conditions.

Meanwhile, the Property Institute’s six-monthly market survey is out and claims 64% of members in the rural sector expect an improvement over the next six months – along with an increase in rural property demand and value.

The survey, across the institute’s members, shows the current residential property sector demand will likely go unchanged, as will the commercial and industrial sectors.

Property Institute president Ian Campbell said the body is pleased that its members who responded are “able to offer their informed view of the current status of their property sector”.

“Since our last survey in November 2010, and contrasting against a generally unchanged position for residential, commercial and industrial property sectors, has been an increase in investor activity and sentiment in rural property.

“This is evident from the survey results received from our members working in this area.”

In other property news,’s latest property report sees Auckland and Queenstown now being viewed as sellers’ markets for housing, as stronger sales combine with lower levels of new listings.

Also, Crockers reports that the annual sales drop in April of Auckland residential properties was sharper than usual, with the median sale price rising to a high of just under $480,000, exceeding the previous peak of $477,000 reached in November last year.

Sales numbers dropped back, given the high number of sales in March (2437 March sales against 1854 April sales).