Confidence Remains High For Property Investors

“Confident but cautious” is the call amongst the country’s commercial property investors.

Colliers International’s third quarter 2014 commercial property investor confidence survey shows investor confidence remains high, however investors are displaying signs of cautiousness in their investment decision making.

Alan McMahon, national director of research and consulting at Colliers International, says the survey highlighted the market’s confidence is strong, but has tempered in recent months.

“Anticipated interest rate rises, stable business and consumer confidence across all locations and the barometer of Auckland’s survey figure pulling back a few percentage points, all added to the “steady as she goes” sentiment,” McMahon says.

our of the 11 centres surveyed experienced a rise in confidence over the last three months. They are Dunedin, Queenstown, Christchurch and Wellington. The capital city showed the most movement by doubling its net confidence measure from 8% to 16%.

“Investors in Wellington are most confident about the office sector,” McMahon says.

Christchurch, which returned a 43% net positive, has typically been the country’s most optimistic centre for the past three years, however momentum in the rebuild is understandably tempering.

“Despite the city’s current rebuild being in a very active phase, it appears the ongoing expectation around it is beginning to moderate,” says McMahon.

“This is not unexpected as activity around the rebuild becomes more established and some sort of equilibrium is eventually restored, but investors are still very positive overall.”

Queenstown bumped Auckland from the top spot this quarter - its strong growth in tourism and having one of the country’s highest population gains in recent years, helped it become the most optimistic location in New Zealand about the year ahead.

The average result for New Zealand as a whole this quarter was a net positive 25% (the same as this time last year) meaning more respondents expect better conditions for commercial property investors over the next year rather than worse, by a margin of 25%.

Whangarei remained the least confident location for the last two quarters with a 24% net pessimistic figure (-24%) this quarter.

“The big spread between the most and least confident cities reflects the vastly different expectations of economic growth in various centres,” McMahon says.

“People’s expectations of upcoming property market conditions are based on expected future demand for property. So it only makes sense that in cities where positive macroeconomic factors create the expectation of increased demand for property, people are optimistic – and the reverse also applies in centres where economic and business growth is still some way off.”

Colliers’ quarterly confidence survey asks commercial property market participants about their views on the outlook for commercial property investment over the next 12 months. 3253 responses were utilised to construct this quarter’s survey results.
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