By NICK CHURCHOUSE - The Dominion Post, Monday 26 March 2007 http://www.stuff.co.nz/4005455a13.html
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Commercial landlords continue to cream it, with annual returns on office property beating sharemarket returns and leaving residential property for dust.
The latest investment performance index from the Property Council of New Zealand has shown owners of central city office buildings were making a 21.8 per cent return for the year till December, up from 18.3 per cent on the previous year.
Auckland was in the top spot, with a 23 per cent return, seven percentage points higher than in the 2005 year.
In Wellington, investment returns slowed slightly from 21.6 per cent in the 2005 year to 19 per cent for the year to December.
With returns from the NZX top 50 stocks at 11.7 per cent and residential property values up 9.3 per cent in the latest figures from Quotable Value, the office building investment sector was well ahead.
Property Council national director Connal Townsend said the gains were boosted by strong capital growth during the period, with Auckland cbd offices returning 13 per cent, double that of the the 2005 year.
Retail property and shopping centres improved as well, with returns of 18.9 per cent and 21.5 per cent respectively, up from about 15.5 per cent in 2005 in both cases.
On the flip side, industrial property investments were down sharply nationwide, with 2005 returns of nearly 25 per cent falling to 13.2 per cent for 2006.
Property Council research chair Alan McMahon said he was surprised by the severity of the drop but it was a natural part of the cycle, merely a slowdown to compensate for a spurt in industrial capital returns in recent years.
The ongoing positive returns from city office buildings would slow at some point too, he said.
"They have performed so horribly from the 90s that they have a lot of catching up to do." The non-central city office market slowed too, with Auckland returns down to 12 per cent from 18.7 per cent in 2005.
The composite figures for the total commercial property sector were down marginally to 17.8 per cent, from 18.7 per cent in the year to December 2005, but were still respectable returns, Mr McMahon said.
"I don't think you'll find any investors complaining," he said.
The latest investment performance index from the Property Council of New Zealand has shown owners of central city office buildings were making a 21.8 per cent return for the year till December, up from 18.3 per cent on the previous year.
Auckland was in the top spot, with a 23 per cent return, seven percentage points higher than in the 2005 year.
In Wellington, investment returns slowed slightly from 21.6 per cent in the 2005 year to 19 per cent for the year to December.
With returns from the NZX top 50 stocks at 11.7 per cent and residential property values up 9.3 per cent in the latest figures from Quotable Value, the office building investment sector was well ahead.
Property Council national director Connal Townsend said the gains were boosted by strong capital growth during the period, with Auckland cbd offices returning 13 per cent, double that of the the 2005 year.
Retail property and shopping centres improved as well, with returns of 18.9 per cent and 21.5 per cent respectively, up from about 15.5 per cent in 2005 in both cases.
On the flip side, industrial property investments were down sharply nationwide, with 2005 returns of nearly 25 per cent falling to 13.2 per cent for 2006.
Property Council research chair Alan McMahon said he was surprised by the severity of the drop but it was a natural part of the cycle, merely a slowdown to compensate for a spurt in industrial capital returns in recent years.
The ongoing positive returns from city office buildings would slow at some point too, he said.
"They have performed so horribly from the 90s that they have a lot of catching up to do." The non-central city office market slowed too, with Auckland returns down to 12 per cent from 18.7 per cent in 2005.
The composite figures for the total commercial property sector were down marginally to 17.8 per cent, from 18.7 per cent in the year to December 2005, but were still respectable returns, Mr McMahon said.
"I don't think you'll find any investors complaining," he said.