Those of you who are interested in residential property should look at the alternative- commercial property i.e shops, office, factories etc. Commercial is totally different from residential as values are based on interest rates, the tenants, the leases etc. It is possible to double the value of a commercial property over night, and just as possible to halve it too. If you are careful and take good advice you should consider commercial as an alternative to residential or have both in your portfolio. Basic commercial property can be no dearer than residential, so it is not out of the reach of the average investor at all.
CBD Gains Strongest
JAMES WEIR AND HANK SCHOUTEN
Commercial property returns are rising strongly on the back of capital gains to a level unseen in five years, after a gradual improvement in the past two years.
The Property Council New Zealand/IPD New Zealand all property index shows a total return of 12.4 per cent for the year ending June 2013. This was made up of an 8 per cent income return and capital growth of 4.1 per cent – a big gain on the 9.2 per cent return on the year to June last year. The strongest gains were in CBD office properties where returns lifted from 11.1 to 14.7 per cent.
In the past 12 months listed property vehicle returns achieved a total return of 15.9 per cent, beating share returns of 14.7 per cent, the Property Council report said.
Property Council chief executive Connal Townsend said the office sector had been the most sluggish sector since the global financial crisis hit in 2008, but that was turning up.
“It has been a bit rare to see any kind of capital growth in the office sector at all,” he said. “Suddenly that has come surging back.”
There had been some big offices built. For example, the big new ASB Bank office on Auckland’s waterfront, which boosted confidence. There remained a sense of concern though about offices in Wellington, with government’s cutbacks on state sector workers.
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