NZ office drives returns for commercial property in Q3 2013

[Full release with charts: PCNZ_IPD_NZ_Index_Q3_Press_Release_7Nov13.pdf]

Press Release

New Zealand office drives returns for commercial property in Q3 2013

Sydney, 7 November 2013: The Property Council New Zealand/IPD New Zealand All Property Index Q3 results released on Thursday, 7 November showed a total return of 12.4% for the year ending September 2013. This was comprised of 7.9% income return and a positive 4.2% capital growth.

The September 2013 results are similar to the previous quarter (12.3% total return) but are an increase on September 2012 (9.9% total return). Returns were driven predominantly by the office sector which is up 5.1% from 2012. Retail returns have fallen marginally from 13.0% in 2012 to 12.3% in 2013. The retail weakness reflects continued softening in New Zealand’s retail trade growth.

The Property Council New Zealand/IPD New Zealand All Property Index provides a broad measure of returns for commercial property investment in New Zealand. The index database is comprised of property assets from 26 participating funds with a combined asset value of NZ$12.3 billion representing 592 investments.

Market conditions have improved with total returns moving above the long-run average annual return of 10.1% (see Figure 1).

Dr Anthony De Francesco, Executive Director of IPD Australia and New Zealand said “the IPD index results highlight the New Zealand commercial property market remains on the upswing, outperforming many global counterparts.

“Solid performance of the New Zealand property investment is consistent with improvement in underlying macroeconomic fundamentals. Expected strong economic growth in the near term should be reflected in performance of commercial property markets. Investment returns are expected to stay above the long-run average."

Property Council’s Chief Executive Connal Townsend said the latest results are an encouraging sign of things to come for the commercial property industry in New Zealand.

“The latest results cement our place in recovery and with that comes a huge sigh of relief. With market conditions improving we are excited about investment returns and hope for the office sector to continue to do well.

Relative to the June 2013 results, New Zealand property investment performance has been stable with annualised total returns increasing by 10 basis points. Compared to the September 2012 results, all property returns are up 250 basis points (see Figure 2).

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About IPD

IPD provides real estate benchmarking and portfolio analysis services to clients in over 30 countries around the world. These services incorporate more than 1,500 funds containing nearly 77,000 assets, with a total capital value of over USD 1.9 trillion. Each year, IPD produces more than 120 indices helping real estate market transparency and performance comparisons, as well as nearly 600 benchmarks for client portfolios. IPD is a subsidiary of MSCI Inc., a leading provider of investment decision support tools to investors globally, and clients include real estate investors, managers, consultants, lenders and occupiers. For further information on IPD, please visit www.ipd.com.

About Property Council New Zealand
The voice of commercial property in New Zealand, Property Council is a not-for-profit organisation representing the country's commercial, industrial, retail, property funds and multi-unit residential property owners, managers and investors, including thousands of New Zealanders with retirement savings in listed property trusts, unlisted funds and KiwiSaver. Our 600 member companies, with a multi-billion investment in commercial property, range from leading institutional investors, property trusts and financial organisations to private investors and developers. For more information, please visit www.propertynz.co.nz.

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