New Zealand - High Confidence In Auckland Office Property Market
August 17, 2012
The Auckland market will continue to rebound while Wellington will remain stable, said AMP New Zealand Office Trust.
AMP New Zealand Office Trust is highly confident of its prospects in the country. The commercial office property investor said that the Auckland market will continue to rebound while Wellington will remain stable.
For the first half of the year, AMP recorded a four-fold growth in profit to NZD 45.1 million. Its portfolio gained NZD 5.5 million in value, in sharp contrast to the NZD 36 million loss seen last year.
According to chief executive Scott Pritchard, the occupancy rate of its portfolio is a high 94%. Weighted average lease term has also increased to 5.9 years, up from 4.3 years two years ago.
Pritchard said that the increase in weighted average lease term has removed a significant amount of risk from the market, a development that investors were hoping for. AMP is evenly exposed to Auckland and Wellington.
Pritchard said that Auckland is outperforming the capital, a trend which he expects to continue. As a region, Auckland has strong population growth, which, coupled with low interest rates, should encourage more activity.
He added that supply of office units in Wellington is expected to be decrease as buildings are taken offline for earthquake strengthening, or become unavailable for lease due to other reasons. With the reduction in supply, the Wellington market is expected to remain stable, and there is some potential for rents to grow.
Pritchard is hopeful that at this time next year there will still be positive revaluation gains, but added that the impact of wider economic variables cannot be ignored, making valuations difficult to forecast.
Tags: Commercial real estate, Business space, Income properties