Renewed confidence in the property market means cashed-up investors and owner-occupiers are poised to invest in the commercial sector if optimism continues, Tommy’s Group CEO Ben Castle says.
“The calendar year is underway and there is an air of confidence surrounding the property market as a whole.
“The recent election result and the fresh changes that have been touted have been met with some enthusiasm.
“Confidence is a big factor in the market. However, fundamentals still play the biggest part.
“Although we have high interest rates and consumer spending has slowed, the net migration factor is definitely a factor.
“The growth in the migration space does provide more confidence in lending, development and investment. Again, confidence helps but how it unfolds is yet to be seen.”
Ben believes the market has hit the bottom as recent data and commentary suggest that interest rates will ease faster than initially projected.
“There are investors and owner-occupiers who are ready, with capital, waiting to invest.
“So if the optimism continues, there might well be an increase in transaction volume sooner rather than later.”
But he notes the quality of stock in Wellington is a consideration for investors, along with the seismic challenges.
“There are loud calls for local government to provide clear direction on a number of areas and an example is how the seismic ratings of buildings will be done.
“Clear direction will help decision-making on investment or development – both of which create activity in the short and medium term.
“There are also challenges with the well-publicised infrastructure issue in the capital, which, in turn, have an impact on rates — which will see leasing, in particular, continue to drive towards net lease tenancies-versus-the gross lease world we have been used to.”
Ben says the likes of Let’s Get Wellington Moving and other projects in the city that have been put on hold to ensure the direction of funding is managed also could have a positive impact.
“There is a feeling that the work-from-home phase may be starting to wane and that is a huge positive for retail and hospitality options to reignite in the city.
“We may well see some higher vacancy sectors of the market start to decrease again which will, in turn, generate more value in property.”
Ben says with the residential market kicking back into life, transactions and listings are increasing week-on-week.
“This recovery may take some time to flow through to the commercial property world, however, it may be closer than we think.”
