Commercial property sentiment in New Zealand is the third most negative in the Asia-Pacific - only China and Hong Kong are worse

By Greg Ninness

New Zealand's commercial property sector continues to face negative demand, with general sentiment being the third most negative in the Asia-Pacific Region, according to the Royal Institution of Chartered Surveyors' (RICS) latest Commercial Property Monitor.

The international survey, which measures commercial property demand around the world, found demand for commercial property in NZ declined between the fourth quarter (Q4) last year and first quarter (Q1) this year.

"Industrial, office and retail have all seen a further fall in occupier interest - as such, availability has risen," RICS said in a summary of the survey's findings.

It found overall commercial property sentiment was strongly negative, much more more so than in Australia, while China and Hong Kong were the only Asia-Pacific countries surveyed where sentiment was worse. (See second graph below).

Repurposing office space was still a feature of the market but at fairly low levels, with 79% of respondents reporting modest levels of repurposing, and 21% reporting no repurposing taking place, while downsizing was still a major feature of the office market.

A slim majority (52%) of respondents said more occupiers were looking to downsize their office space, while 14% said there had been no change and a third said downsizing levels had decreased.

As would be expected in a soft market, the biggest falls in demand and value had been in the second and third tier properties that were not considered prime.

"Quality is a key issue, as are funding and interest rates," the RICS said.

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