Half year health check
The first six months of 2019 have finished. We recap how commercial and industrial markets have performed so far and what could be in store for the remainder of the year.
In January 2019, expectations for growth were starting to emerge after a rough patch in global political, economic and financial concerns at the end of 2018. By February, there was less global political tension and a dovish interest rate announcement from the US Federal Reserve due to lower global growth rate predictions. This led to a renewal in the search for yield and investor interest was amplified.
Locally, the rejection of a Capital Gains Tax (CGT) in April refreshed confidence, and by May, purchaser enquiry was well and truly back on track. The top right chart shows how the NZX50 and property companies surged ahead in the first six months of 2019. Direct property sector results were strong with average rents up between 3% and 5% p.a. and average yields had firmed by between 15 bps and 25 bps. Alongside these positive investment metrics were the historically low vacancy rates and a relatively balanced supply pipeline.