Offices lead commercial property returns

MICHAEL FOREMAN
Last updated 13:20 26/08/2014

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The tightening labour market has helped commercial property deliver an average return of 11.1 per cent in the year ending in June 30, according to the latest figures from the Property Council.

The council's quarterly property index, which monitors 26 property funds, shows that the overall return was comprised of 7.7 per cent in income return and 3.1 per cent capital growth.

The office sector led the market, delivering an average return of 11.9 per cent.

International property benchmarking firm IPD, which compiles the index, said a tightening labour market was helping to boost demand for office space in key markets such as the Auckland CBD as there were more in people in work needing accomodating.

New Zealand commercial real estate returns had been outperforming the Australian market since September 2012, IPD said.

At 11.1 per cent, the New Zealand total return was about 1.4 percentage points higher than returns in Australia, IPD said.

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