Commercial property returns softening

A new gauge of the commercial property market shows the sector is softening, earning an across-the-board annual return of 5.9 per cent.

The Property Council of New Zealand/IPD commercial property index has been launched to give investors a measure of performance across the office, retail and industrial property sectors.

It takes data from 14 participants, representing 21 funds or portfolios with a combined asset value of $9.6 billion.

Overall, commercial property returned 5.9 per cent. For the year to June, the return on income was 8.5 per cent and the loss in capital growth 2.4 per cent.

The council said the result was slightly lower compared with the previous quarter (6.1 per cent) and well down against a long-run return rate of 10 per cent.

“The latest results suggest that the commercial property market displays a lack of strength,” said Anthony De Francesco, of IPD Australia and New Zealand.

Source:  Businessday.co.nz