Value dip hits office block returns

The Property Council's investment performance index shows a slight improvement in the fortunes of Auckland office blocks, but their values are still declining.

Figures issued yesterday showed an 8.93 per cent annual income return from Auckland CBD office blocks for the March year, compared with an 8.67 per cent return for the December year. But both periods still gave a total income return of only 3.6 per cent because the capital improvement was also taken into account.

The index measures the performance of 318 properties worth $3.7 billion, spread geographically and across various uses, including retail, commercial and industrial.

Auckland's CBD offices showed a 5 per cent drop in value in the March year, compared with a 4.7 per cent drop in value in the December year.

Commercial property nationally is showing a slightly better return. Offices throughout the country returned an annual 9.96 per cent in income (9.88 for the December year) but dropped 3.6 per cent in value (3.9 per cent), giving a total return of just 6.09 per cent (5.7 per cent).

The Property Council