"Welcome to 2017"
Jan 31, 2017
Welcome to the first Auckland City & Fringe e-newsletter of 2017. We hope you had a relaxing Christmas break and have enjoyed a bit of the recent good weather. We are excited to see what the year of 2017 holds for us as 2016 was a record year for the Auckland City & Fringe Commercial Team.
The latter part of 2016 was characterised by outlier results including Brexit, Donald Trump winning the US election and a on the local front, the surprise resignation by John Key. These factors have increased the uncertainty in predicting what will happen in 2017.
Nationally we have witnessed an increase in the LVR requirements for residential investors. This along with current and potentially further rises in interest rates have resulted in a temporary dampening in the residential market.
On the commercial front, we have seen a tightening in money supply, more especially on development land. We are already witnessing a “flight to quality” whereby we expect in 2017, that only the quality development sites with experienced and proven developers and good pre-sales will get out of the ground. This will be reinforced by the fact that in the last few months the Australian owned NZ banks have become more stringent on their lending requirements.
Whilst these market changes have made some developers and investors nervous, we still feel that in the short to medium term there will still be good strength in the commercial property market, due to many investors needing to secure an income stream better than that received at the bank. Continued low interest rates, higher volatility in the equities markets and a possible flat residential market are all factors which support commercial property investment. We also believe that proportional property ownerships (syndications) will continue to be in high demand. Also with the increased difficulty for Chinese investors to get their money out of China, we see an improved opportunity for local investors to purchase commercial property with significantly less competition from off-shore buyers than in recent years.
All indicators point to 2017 being another solid year for the Auckland City and City Fringe commercial property market. Immigration is currently above 70,000 people p.a. and demand for well-located investment property (particularly in the Auckland City and Fringe market) will continue to be driven by a lack of supply. Bayleys first portfolio magazine for the year, Total Property 1 is released this Friday.
If you would like any further information on the commercial property market or if you would like to discuss selling or leasing your property in 2017, please don't hesitate to contact me or one of the City and Fringe Commercial team. Otherwise if you wanted to give us some feedback / tips on what you would like us to cover in our e-newsletter then we would love to hear from you.
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