KEY POINTS:
Continuing strong demand from tenants and increasing rents are expected to maintain good returns for commercial property investors, despite a predicted softening of returns in the remainder of 2008.
Latest available Property Council figures for the year ending March 2008 show returns of 18.3 per cent, down a little from 19.7 per cent in the previous year, but still well ahead of the Bonds returns of just 5.8 per cent.
However commercial property commentators warn that these figures do not take into account the full effects of worldwide credit crunch in the first half of this year.
Despite a predicted softening, Property Council CEO Connal Townsend said he remains confident that the fundamentals for New Zealand's commercial property markets are sound.
Property Council research boss Alan McMahon echoed this sentiment.
"It's important to appreciate that these are the results for the year ending March, and so includes valuation and sales data from strong 'pre-credit crunch' quarters in 2007.
"It's likely that as we progress through 2008, and these robust 2007 data drop off, that capital returns will reduce. However, fundamental tenant demand, illustrated by indicators such as increasing rents and low vacancies, continues to be strong", he said.
