The commercial property market in New Zealand is showing positive signs, as sentiment is running high and the market has pulled away from Australia, according to the latest regional report released by the Royal Institution of Chartered Surveyors (RICS).
As a result, there are two very different pictures in the commercial property picture between New Zealand and Australia. The Australian market is working its way through moderate economic growth rates. Sentiment in the occupier market is negative.
According to the report, the Australian commercial property market’s situation is being compounded by a combination of decreases in occupier demand, higher vacancy rates and lower rental expectations. The latter have slid to a five-year low. Inducements by landlords have increased and development starts are static.
In New Zealand, the market is much brighter. For one thing, occupier demand has reached a five-year high as the economy continues to recover. Construction is expected to continue to drive growth over the next few years.
Kaye Herald, the Asia Pacific Managing Director at RICS, said, “With the New Zealand economy expecting to grow by around 2.6 per cent over the course of the year to June, and Australia’s economy slowing in the second half of last year and looking to be below trend for 2013, the market has responded accordingly.”
She went on to point out that while investor sentiment in Australia remains positive in this quarter, it has dropped below previous levels. In New Zealand, the sentiment of investors is remaining close to the highs reported during the last quarter.
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