Confidence in Wellington property market growing after quake

Auckland, March 24, 2017

Confidence in Wellington’s commercial and residential property market has been growing since last year’s quake, the latest Colliers International quarterly survey results show.

The Commercial Property Investor Confidence Survey and Residential Property Market Outlook Survey were conducted by the Colliers International Research and Consultancy team this month.

The results show net confidence in Wellington’s commercial property market has grown since November’s magnitude 7.8 earthquake, which reduced available office space by 7 per cent. Overall confidence is at 29 per cent, up from 22 per cent in Q4 2016.

Optimism in the capital’s office sector has reached a record high, with confidence at 39 per cent – the most positive result since the survey began in 2006.

Confidence also remains high in the Wellington residential market, at 51 per cent, up from 28 per cent in December 2016. However, this is still lower than the pre-quake high of 63 per cent in September 2016.

Colliers International Wellington Managing Director Richard Findlay says the commercial office market is experiencing an accelerated development cycle with unsatisfied demand for quality and earthquake resilient office space.

“Our prime and A Grade office vacancy rates are at an all-time low. The overall office stock has been reduced as a consequence of the November earthquake,” he says.

In Wellington’s residential market, Findlay says overall confidence is defined by the lack of listings, with residential agencies reporting historically low levels of properties for sale.

“Business confidence in Wellington remains high and as a result there are more buyers looking to upgrade their homes,” he says.

“The Wellington residential investment market is strong, with large increases in rentals which is having a positive influence in prices.

“Student numbers in Wellington have hit a record high, with more than 30,000 students now attending tertiary education providers in the region including Victoria University, Massey University and Whitireia Polytechnic.”

The Colliers International surveys found overall net confidence in the New Zealand commercial property market remains positive at 24 per cent, down from 32 per cent in Q4 2016, while confidence in the national residential market remains steady at 41 per cent.

Colliers International Research and Consulting National Director Alan McMahon says while there has been a dip in commercial investor confidence, the 24 per cent net positive result means a significant majority of those who think the market will change are optimistic.

“New Zealand market fundamentals are sound, with demand for offices, shops, and industrial property steady to strong across the country,” he says.

“Centres with good growth in resident or visitor numbers, which boosts demand for all property types, tend to have higher confidence.”

The top commercial market for investor confidence is Queenstown, which at 67 per cent has held the top spot for the last seven quarters. The top four is rounded out by Tauranga/Mt Maunganui (56 per cent), Auckland (47 per cent) and Hamilton (41 per cent) for the third quarter in a row.

The top residential market is also Queenstown, where investor confidence is at 74 per cent. The hot spot is followed by Hamilton (59 per cent), Tauranga/Mt Maunganui (56 per cent), and Auckland and Nelson (43 per cent).

McMahon says the overall positivity in the residential sector is a strong result.

“It is no surprise that where population growth is strongest, upward price pressure is more evident than in centres with slow-growing or static populations,” he says.

“The exception is Wellington, which is showing huge confidence despite a relatively slow-growing population. Our view is that Wellington has been too cheap for too long and is now playing catch up.

“At the other end of the scale Christchurch confidence is neutral, suggesting equilibrium between demand and supply.”

The surveys were based on 2,299 responses from the commercial sector and 14,781 responses from the residential sector.

ENDS

Full results are available in the accompanying Commercial Property Investor Confidence Survey and Residential Property Market Outlook Survey.

Commercial_Property_Investor_Confidence_Survey_Q1_2017W.pdf

Residential_Property_Market_Outlook_Survey_Q1_2017W.pdf

About Colliers International:

Colliers International Group Inc. is a global leader in commercial real estate services with 15,000 professionals operating from 396 offices in 68 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 10 consecutive years, more than any other real estate services firm.

Founded in Australia in 1976, Colliers International is the largest locally formed real estate services firm with professionals worldwide. Find out more at www.colliers.co.nz

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