Commercial property has posted its lowest return for 16 years, according to the latest New Zealand Property Index report.
New Zealand CBD offices returned -5.2% to June 2009, having fallen almost a whopping 20% from the 14.7% positive return posted the same time last year.
The Property Council cites the main driver for negative returns was the continuing writedowns of property values in June valuations. Capital growth for CBD offices fell to -11.6% in the 12 months to June, the lowest recorded since 1993.
Income returns have also offset capital losses and have risen slightly to 7.2% for the year to June.
A combination of softer cap rates and an anticipated softening of demand has accelerated the pace of capital depreciation over the last quarter, from the -6.6% recorded over the 12 months to March. Auckland CBD offices have been hit harder than Wellington's, having fallen to -13% compared to the capital's -10.3%.
Data for other property sectors around the country have not been made public, due to a lack of valuation evidence from market participants, the Property Council says.
The index's advisory group chairman Alan McMahon says the company is hoping to be able to publish a full index of figures in quarter three.
"We have an exceptionally good indicator of performance for the March financial year end, but have required more market data than was available to us for the release of a June update. We hope to be able to publish full New Zealand Index figures in Q3 2009 based on more valuation evidence," he says.
The June index was based on a sample of 327 properties from 14 portfolios, totalling $8.2 billion as at the end of March this year.