Commercial properties rebound
The major news this week was the release of International
investors putting New Zealand in their top-10 list of Asia-Pacific real estate
investment targets (Gibson, 2014) . This has caused
Commercial property sales to rebound after the 2012 slump.
Investors will look for real-estate opportunities as demand
pushes prices to increase over the foreseeable future. This is expected to be
the main driver for the increase in Demand for commercial property in New
Zealand.
“Jones Lang LaSalle, said more than $2 billion worth of
properties sold for more than $5m last year, with office properties leading the
way.” (Ninness, 2014) This is positive news for Welly Real
Estate as office values will increase and this is an indicator that investors
are willing and able to pay upper market prices for office space.
Again with increasing foreign investment Industrial prices
will continue to increase. The main driver of these prices will be the Auckland
region as 76% of sales, in 2013, occurred in the Bombay hills. (Ninness, 2014)
Individual firms will receive a boost in Assets as land
value increases. This will increase their lending ability, however the recent
OCR increase of 0.25% has increased interest rates in an attempt to cool the
housing market. This will discourage lending.
“To keep inflation expectations in check, interest rates
would need to rise towards a level where they were no longer pushing the
economy forward, adding to demand.” (WEIR, 2014)
Interest rates are expected to continue to rise to combat
inflation. However interest rates are at a 50 year low, so interest rates are
still relatively low. (WEIR, 2014)
This is positive for Welly Real-estate as opportunities
arise in the short term. I recommend that Welly Real-estate invest in both
industrial and commercial property in the immediate future. I predict the
market values will continue to increase as investors will look to increase the
Supply of commercial space in Major cities throughout New Zealand. This increase
in Supply will be done by utilizing idle resources, such as empty or idle land
lots.
This will increase the inflow of cash to Welly Real-Estate
in the short term as sale opportunities are expected to arise. This will help
to keep them operating in the foreseeable future.
Wilson Collin, 300238419
Work Cited
Work Cited
Gibson, A. (2014,
march 25). Foreign funds eye NZ commercial real estate. Retrieved from
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11225553
Ninness, G. (2014,
March 25). Commercial property sales rebound. Retrieved from
http://www.stuff.co.nz/business/industries/9865977/Commercial-property-sales-rebound
WEIR, J. (2014,
March 13). Mortgage pain time: OCR rises to 2.75 per cent. Retrieved
from
http://www.stuff.co.nz/business/money/9822918/Mortgage-pain-time-OCR-rises-to-2-75-per-cent
Good to see you using multiple references in this post. You need to make sure you are referencing all the way through. If I need to ask how you know something it’s a good indication that it needs a reference.
ReplyDelete“Jones Lang LaSalle, said more than $2 billion worth of properties sold for more than $5m last year, with office properties leading the way.” (Ninness, 2014) This is positive news for Welly Real Estate as office values will increase and this is an indicator that investors are willing and able to pay upper market prices for office space.(REFERENCE) –comment below
How do you know that people will pay upper market prices? Would be god to have another reference here.
You have said : I predict the market values will continue to increase as investors will look to increase the Supply of commercial space in Major cities throughout New Zealand.
This needs to be backed up…who else has predicted this? This will strengthen your advice.
Also, make sure you are using the terminology that Fabricio has gone over in the lectures. This will not only strengthen your advice but will show your level of understanding.