Top commercial property predictions for 2018

Top commercial property predictions for 2018

Total Property - Issue 8 2017

RETAIL 2.0: New Zealand’s retail sector will be forced to upgrade in response to Amazon’s arrival in Australia. Smart bricks and mortar retailers will evolve into a blend of "grab it now" and "have it delivered" outlets while smart digital retailers will invest in physical stores.

CASH IS KING: Income performance, returns and cash flow will be crucial in 2018. Property managers will be under pressure to work assets hard. Finance will be more difficult to obtain.

RATES WILL RISE… BUT WILL STILL BE LOW: Most economists believe the Reserve Bank will lift the OCR – currently at 1.75 percent. The prevailing view is the end of 2018 or 2019. Inflation is still low, so any lift by the Reserve Bank will be small so as not to upset the economy.

FOLLOW THE INFRASTRUCTURE: New developments will be based around new population nodes and transport infrastructure. Existing transport hubs will be ripe for intensification.

GOLDEN TRIANGLE STILL GOLDEN: It’s been the one to watch for some time now, but the Golden Triangle of Auckland, Waikato and the Bay of Plenty is where the best opportunities lie. It’s where about 50 percent of New Zealand’s population lives and its economy is still growing at a strong rate.

INDUSTRIAL STRENGTH: Compared to other asset classes, there’s more stock available and at a better price point – although bidding is competitive. It doesn't require much in the way of property management and there's more potential to add value.

HOTELS ARE HOT: New Zealand is well on its way to achieving its goal of growing annual tourism revenue to $41 billion by 2025. But to keep growing, New Zealand needs more hotels. For owners of secondary CBD office stock, this could be an opportunity to sell at a good price to hotel developers.

THE WINSTON EFFECT: The new Labour-led Government is to set up a commission to examine the feasibility of moving Port of Auckland to Northland, as proposed by new Deputy Prime Minister Winston Peters. If the relocation goes ahead, it will be New Zealand's biggest infrastructure project, requiring up to $10 billion in government funding just to get it off the ground. It would bring new road and rail infrastructure and plenty of commercial and residential property development to Northland and open up the 77ha Port of Auckland currently occupies to redevelopment.

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