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Commercial property powers on

Wednesday 17th December 2003

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Residential property may be getting all the headlines, but numbers from the Property Council show commercial property continues to power on.

Total returns on property investment for the past year to September 30 are up to a healthy 11.04%.

The Property Council's Investment Performance Index shows this is a 27% increase over the same period last year.

"The continuing strong commercial property capital value increases for the second quarter in a row are the reason behind these robust returns," says Colliers International corporate services director Alan McMahon, who is chairman of the Property Council's Research Committee.

According to the index property outperformed bonds, and although the sector showed a lower return than equities over the same period, property had much lower volatility. It was a more stable performer, McMahon says.

Outstanding returns among the various sectors analysed by the Property Council were non-CBD office, mostly in Auckland, at 10.65%, an increase of 5% over the same period last year, and Christchurch industrial property at 14.32%, up from 10.35% in the past year.

"The most satisfying aspect of the current numbers is that every sector in every location is doing well," McMahon says.

"Strong investment demand may abate slightly as equities continue to recover and interest rates begin to edge upwards, ut the fundamentals for property investment are sound, and we see continuing solid performance for the sector."

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