Commercial property rents set to rise
Owners of earthquake-prone commercial buildings will miss out on the benefits of an improving property market, property experts warn.
Colliers International's national director research and consulting Alan McMahon told delegates at a Property Council meeting in Auckland that demand for high-grade, structurally secure buildings was high.
"The pendulum is definitely swinging back in the landlords' direction, with the exception of earthquake-prone stock. Rents for top end buildings will go up.
"Overall the situation is pretty good. Rents in Auckland's CBD and metro areas are improving, and we are predicting growth in the industrial market along with Wellington's prime office market."
McMahon recognised that the majority of owners of buildings built before 1976 were individuals who might not have the financial ability to strengthen their properties to the required earthquake standards.
ASB Bank's chief economist Nick Tuffley agreed earthquake strengthening was becoming a property market issue, particularly but not exclusively in Wellington.
He said ASB had seen its property finance book pick up strongly in the second half of last year, and the pipeline for this year had more than doubled.
"To put that in perspective, overall market credit to the business sector remains muted, so property appears to be gaining strong momentum."
Meanwhile, in the residential housing market, one of the country's largest real estate firms, Harcourts, says a shortage of listings nationally is beginning to bite.
"Every region in the country, with the exception of the central North Island, has seen the inventory of property available to buyers reduce in February, when measured against the same time in 2012," said Hayden Duncan, Harcourts' chief executive.
The data now coming out of Auckland, Wellington, Christchurch and the provincial South Island seemed to confirm Auckland's robust market was inspiring confidence further afield.
"The Government still remains in a state of paralysis, seemingly to be doing more politicking than showing any signs of real action to relieve this accommodation shortage," Duncan said.
"Let's hope they soon free up the reins that are holding many developers from creating homes and much-needed construction jobs."
Harcourts figures showed new exclusive listings in January were down 11 per cent in its northern region - which includes Auckland - than at the same time last year.
But competition for properties had pushed its auctions to a record level, up 106 per cent.
It was a similar story in quake-affected Christchurch, where new listings were 21 per cent lower than last year, and auction rooms were "overflowing".
Increased competition for stock had pushed the number of auctions up 42 per cent, but prices remained flat.
However, in provincial South Island, where many quake victims have moved, prices were up 21.5 per cent and new listings were down 8.6 per cent.
Auctions jumped 80 per cent but Harcourts cautioned that the price hikes were off a low base and could be skewed.
In the central North Island, confidence in the rural market seemed to be flowing through to sales. Listings lifted by a marginal 1.6 percent but there was a 28 per cent rise in written sales, albeit off a low base.
In Wellington, new listings were down 4.9 per cent, and prices were 5.4 per cent lower than the previous year.
However, auctions were up 27 per cent and written sales were up 24 per cent, indicating that supply and demand was starting to come back in the capital.