Bayleys Christchurch commercial and industrial salesperson Greg Mann notes that residential property investors in the city have yet to jump over to a new asset class.
Higher Loan-to-Value Ratios for residential property investors level the ‘playing field’ - as residential investors now require the same equity for their asset acquisition which commercial property investors have typically been required to find.
So will this tempt some residential property investors to move into commercial investments where the returns, and risks, are greater? A quick search of listings on the website primecommercial.co.nz shows there are approximately 20 commercial properties to buy in Christchurch under the $500,000 benchmark.
In Christchurch, where capital gain on residential property has been low for several years, the argument in support of a shift to commercial property investment has to be more compelling for many to make the move into a field where they may not have the same degree of experience as letting a three bedroom home.
Simultaneous low yields and high vacancy rates exist in the commercial and industrial property markets. There are some unusual drivers for this – notably low business growth, and very low-interest rates.