It was an interesting last quarter. The Reserve Bank NZ, after ignoring obvious signals from the economy that interest rate relief was critical in reigniting activity, have now lowered the OCR to 4.75%. There is strong speculation that there should be at least another 50-basis point drop later this month. While the impact of this will be staggered as existing fixed rates expire, new lending is able to benefit immediately from these lower rates.
The US election result, while threatening to be a close-run thing, ended up being won convincingly by Donald Trump. No one really knows the impact of this change in government but it is further evidence that the Western World are all looking for a change of direction in this post Covid era.
Commercial purchasing activity has certainly increased and seems to be driven by investors, principally those with cash. That said, the lower interest rates will start to swing the pendulum back in favour of owner occupiers too and we would expect stronger activity from that sector in the second half of 2025.
Leasing remains subdued as the bulk of tenants, most affected by economic trading conditions, seem content to stay put and continue to drive the revenue line or rationalise costs. To that end the most recent unemployment data sees almost 1 in 20 kiwis now out of work. Ultimately that will drive efficiency and productivity as businesses benefit from higher caliber employees.
The availability of industrial leasing stock remains at historically low levels but CBD office and retail both remain in plentiful supply.
There has been a notable improvement in the residential market in Hamilton. October will be the strongest month for sales volume in over three years. First home buyers and investors are still the most active, the latter taking advantage of changes to interest deductibility and the reducing of bright line term introduced by National. That is also assisted by Hamiton again recently being confirmed as New Zealand’s fastest growing city. This will naturally flow through to business confidence and the Commercial sector in time.
There is huge demand from residential renters. If you have an interest in investing in the multi-unit space (more akin to Commercial Investment) then please reach out to our in house expert Vaughan Heslop to explore some great opportunities in that space.
We welcome Scott Sadgrove to the team this quarter. With a career in sales, Scott is eager to learn the ins and outs of Commercial Real Estate, to add value to his existing array of sales skills.
If we can assist with your Commercial property or body corporate needs then please contact your preferred Lodge agent.
Finally, we would like to take this time to thank you for your on-going support. Another year seems to have flown by. We wish you and your families a safe and enjoyable festive season.