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Apartment market in Auckland CBD in full recovery mode as overseas students return, with vacancy rates back to pre-pandemic levels and rents rising


By Greg Ninness,

Auckland's CBD (central business district) apartment market has made a rapid recovery due to the resumption of overseas students being allowed into New Zealand.

CBD apartments are a niche market that to a degree marches to the beat of its own drum.

Like the mainstream residential property market it is also affected by things like changes in mortgage interest rates, bank lending criteria and taxation rules. But it differs to the rest of the market in that it is completely dominated by investors and most of its tenants are students, which are estimated to account for around three quarters of the sector's tenancies, especially for the smaller apartments often referred to as shoeboxes.

Overseas students make up a big proportion of those numbers. The sector was hit hard when the borders were closed due to pandemic restrictions in early 2020, with the number of overseas students diving abruptly from 21,153 in January 2019 to just a few dozen a month.

Delanie Horrobin, the Business Development Manager at Ray White Supercity Property Management, which manages one of the largest portfolios of rental apartments in Auckland's CBD, said the vacancy rate for CBD apartments shot up from just over 7% in 2019 before pandemic restrictions were introduced, to 15% to 20% in 2020.

"A lot of properties were left vacant for a long, long time. Many owners suffered hardship," she said.

However the sector began recovering once travel restrictions eased and overseas student numbers started picking up again, which has happened surprisingly quickly.

According to the Ministry of Business Innovation and Employment, just 90 people arrived in NZ on student visas in January last year. That had picked up to 4152 by July last year, and 7413 in January this year. In February another 13,638 arrived, which was heading back up towards the 21,153 that arrived in February 2019.

Horrobin said her company noticed the pick up in demand from tenants in December, which is usually a quiet month with many students giving up their flats and heading home at the end of the academic year.

"We started to see increased numbers of attendees at our viewings, even in December when it is usually quiet. It was steady all the way through, it didn't die off, she said.

"And then [in January] it really picked up."

Horrobin said the CBD apartment vacancy rate dropped back to about 10% late last year and has kept falling since.

"I'd say it's back to where it was [in 2019]. It's been a full recovery," she said.

That has not gone unnoticed by investors.

Over the last few weeks has noticed a change in mood at the Auckland CBD apartment auctions it monitors.

While the overall housing market remains well and truly mired in the doldrums, the mood at the apartment auctions has been more upbeat, with more people attending and more apartments selling under the hammer (you can see the results of all the Auckland CBD apartment auctions monitored by, including the prices achieved for those that sold, on our Residential Auction Results page).

Investors have been buoyed by the fact that not only have vacancy rates fallen, but rents have been rising.

According to the latest bond data from Tenancy Services, the median rent for one bedroom apartments in Auckland's CBD increased from $395 a week in December last year to $433 in January this year, while the median rent for two bedroom apartments increased from $515 a week to $560 over the same period.

However it appears that the selling prices of apartments are yet to reflect those changes, with's auction results showing that most of the apartments selling are still fetching prices that are significantly below their rating valuations.

Some investors are sensing lower vacancy rates and higher rents will eventually push up prices, so are jumping in now to buy at a higher yield and make a capital gain further down the track.

Of course it's a strategy that is not without its risks and it's worth noting that although rents have jumped up this year, they are still below their historic highs.

Bond data from Tenancy Services going back to the beginning of 2016 shows that the median rent for one bedroom apartments in the Auckland CBD peaked at $450 a week in November 2017 and again in November 2019, while the median rent for two bedroom apartments peaked at $590 in May 2019.

So rents still have a little way to go to get back to those levels.

The graph below plots the monthly median rents for Auckland CBD apartments from January 2016.


It shows that rents have pretty much remained remarkably stable over that period with relatively small fluctuations, so significant growth, whether that be in rents or prices, may yet prove elusive.

This story was originally published on and has been republished here with permission.