Multiple sectors of the Otago property market are showing resilience, despite the economic headwinds of 2023, according to the latest research from Colliers.
The Otago Market Review & Outlook 2023/24 gives an overview of residential, commercial, and industrial markets across the Otago region.
“The New Zealand residential property market has seen a shift following a period of dramatic price escalation, largely driven by OCR increases, resulting in rapidly rising mortgage costs. Queenstown continues to buck the national trend with values holding through the first half of 2023,” Beard says.
“The Wānaka market has stabilised particularly in the entry level to mid value range sector. In both markets, migration to the region appears to be increasing with rental property stock shortages and increasing rental levels across the region.”
The review also showed that in Dunedin buyer demand remains strong with reliance on the health and academic sectors undertaking large scale capital work underpinning the demand for housing.
The Queenstown CBD has an improved streetscape following prolonged construction and several major leases have been signed with global brand name tenants cementing Queenstown’s status as an international resort destination.
Queenstown office occupiers continue a trend of migration to Frankton for new office supply. The Frankton industrial property market continues to display a lack of supply amid growing demand due to constrained land availability.
“In both Wānaka and Queenstown, commercial property continues to be tightly held. However, we expect a stabilisation of yields due to macroeconomic factors to continue to influence the region,” Beard says.
“Cromwell’s commercial and industrial markets remain healthy with high occupancy levels and increasing levels for industrial property with Cromwell leveraging its Central Otago hub status and ability to service the wider region.”
In Dunedin, the retail market remains strong with high tenant demand for bulk retail space. Office rents for Dunedin CBD continue to grow and industrial space remains scarce especially in the inner city. The shortage of available development sites is unlikely to ease in the short-term due to geographical constraints and limited freehold land.
Headwinds prevail in the current economic environment, however the overall property market in the Otago region remains resilient with growth expected in the tourism sector.
The full Otago Market Review & Outlook 2023/24 can be found here.