Silver lining in confidence level drop

Silver lining in confidence level drop

Results of Colliers International’s latest Commercial Property Investor Confidence Survey

Results of Colliers International’s latest Commercial Property Investor Confidence Survey for the September 2015 quarter:

• Investor confidence has declined by 10 percentage points in the last quarter, bringing overall confidence to 17%. This means that optimists outnumbered pessimists by a margin of 17% compared to a margin of 27% from June 2015. This is the biggest drop in investor confidence since the national survey began in 2008.

• Chris Dibble, Colliers’ Associate Director of Research & Consultancy, says that combined with local influences there have been a number of high profile external factors contributing to the latest decline in overall confidence.

“China’s slowdown and share market volatility at the time of the survey boosted the number of pessimists about the future of New Zealand’s economy. Concerns also increased around the value of New Zealand commodity prices as dairy payouts took a tumble. These events likely impacted on investors’ expectations of future property performance.

“Underlying conditions have steadied since the survey, but indications are that investors believe higher levels of economic growth will not be sustained over the long-term. This is a reasonable expectation. New Zealand’s economic growth has been one of the highest in the OECD for some time and it is now returning to a more moderate performance outlook. This will see property investors recalibrate their expectations.

“Overall there are still more optimists than pessimists and factors such as lower exchange rates, record high net migration, growing tourism levels and low mortgage interest rates will keep momentum positive.”

• Christchurch’s confidence levels have continued to decline, which can be considered a positive outcome.
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Dibble says this reflects a return to normality for the city.

“The more progress there is in the rebuild activity, the more conditions – including confidence expectation levels – return to normal.

“So ironically we see a decline in this instance representing a trend towards a more balanced investment environment.”

• Auckland has experienced a significant decrease in confidence, dropping 20 percentage points from last quarter to a net positive 42%. This is the lowest result for Auckland since 2012 and indicates that maintaining high levels of optimism is challenging anywhere in the country.

• Bucking the trend were investment intentions in Hamilton - net positive 28% - one of its strongest in 18 months.

• Investors are the most confident about Queenstown’s prospects, with a net positive 52% of investors optimistic about the next 12 months.

• 4,943 responses were utilised to construct the survey results.

ENDS

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