Commercial Yields Firm



For those of you who are not familiar with commercial property “firmer yields” means that the percentage returns from commercial are dropping. In other words investors are paying more and more for the same cash flow. For instance a few years ago a property producing $50,000 rent may have been sold at a 10% return = $500,000 sale price. Today, because of  firming yields the investor may be happy to accept a 5%  return = $1M sale price.

Same property- double the price.


Auckland leads in firming yields
By Colin Taylor
Wednesday Feb 20, 2013

Office sector still offers best rental performance.
Auckland’s industrial, office and retail markets are going strong. Photo / Brett Phibbs
Commercial property yields across Auckland have shown the strongest drop across New Zealand over the past year, according to the latest NZ Prime Property Performance Index research published by CBRE.

The publication tracks the current and historic rent and yield performance of prime office, retail and industrial property submarkets in Auckland, Wellington, and Christchurch.

Zoltan Moricz, CBRE’s senior director of research and consulting, says over the past year the industrial, office and retail investment markets in Auckland have experienced the most yield movement.

“The remaining market sectors experienced lesser rates of firming over the past 12 months. This is being driven by investors becoming less risk-averse. We are also seeing a broadening of investor interest, with a greater willingness among investors to take on secondary stock.”


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