Commercial Property Can Be Rewarding

Commercial property returns shine as bond yields fall and capital gains kick in; income returns stable
May 15, 2013
David Chaston

Returns on New Zealand commercial property rose slightly in the March 2013 quarter and reached 10.6% p.a., according to the latest research done for the NZ Property Council by research house IPD.

From a survey of 566 major properties in 29 property portfolios, the total capital value has now reached NZ$11.7 billion.

Returns in the survey include both “income returns” and “capital returns”.

The “capital returns” are based on revaluations, and 83.4% of properties surveyed were revalued in the March 2013 quarter.

Income returns were pretty stable across the three sectors surveyed – retail, office, and industrial – at about 8.2% pa. (the Capitalisation Rate ).

Capital returns were highest for retail properties, adding 4.2% to the income returns for a total annual result of 12.4% pa

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Posted in News & Articles | 2 Replies

2 thoughts on “Commercial Property Can Be Rewarding

  1. Can you share any tips on finding good sources of finance for commercial property? Banks will only lend 65%.

  2. If the standard banks won’t help there are non-bank lenders who will. Since the demise of finance companies it’s become harder to get loans over 66% but non-bank lenders may go to 70-75% for the right building. The interest rate is higher of course and can be anywhere from 8% upwards depending on the risk and desperation of the borrower.

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