Listed commercial property companies collectively own $20 billion worth of office, retail and industrial assets across New Zealand, but that value is expected to fall by millions more as higher interest rates take hold.
This cyclical event of declining asset values was more painful than the global financial crisis because it was coupled with rising debt costs, Forsyth Barr senior equities analyst Rohan Koreman-Smit told Markets with Madison.
“We’ve currently got interest costs where investors raising debt to buy some of these assets need to pay 7 or 8 per cent. Making that work from an investment basis ... is tough.”
The market had already priced the pressure in, with real estate under-performing the broader NZX Top 50 index for the majority of the past 12 months.
