Capital growth continues for commercial property markets

IPD PRESS RELEASE PCNZ/IPD New Zealand Property Index 22 August 2012

Capital growth continues for New Zealand’s commercial property markets

Auckland, 22 August 2012

Overview

The PCNZ/IPD Commercial Property Index provides a measure of investment market performance across office, retail and industrial property sectors. The index is comprised of data from 20 participants, representing 25 funds/portfolios with 575 assets worth cNZ$10.3 billion representing c65% of the total New Zealand property market. The index details income return and capital growth on a quarterly basis. The index also provides pricing and market metrics such as capitalisation rates, discount rates and capital values.

PCNZ/IPD Property Index Performance – June 2012

Released today, the index recorded a second consecutive quarter of annual capital growth in three years of 0.3% for the broader New Zealand property market. Annual income return was 8.2% which resulted in a total return of 8.5% for the year to June 2012. The result represents a mild strengthening in annual return in comparison to the previous quarter of 8.4% but is still lower than the long-run total return of 10%. Figure 1 shows rolling annual nominal total return split by income and capital return. The chart shows the upswing in commercial property and the first annual period of positive capital growth. 8.5% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Total return for direct commerical property rolling annual return on quarterly periods to June 2012 Capital return Income return Total return Long-run average Source: IPD Research. Note: direct property returns based on PCNZ/IPD Index.

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