Strong New Zealand investor demand drives yields below 5 per cent in Queenstown

Posted on 13 July, 2014 by Jodee Redmond

Bayleys Research says that a healthy level of investor interest in New Zealand has pushed commercial property yields below the 5% mark in Queenstown.


The latest report on the district’s property market notes that the CBD in general is sought after, but there are definitely parts that are considered more attarctive than others by investors.

As the level of tourism in the city expands, demand in the CBD’s prime retail area is expected to increase as well.

Currently, there is a shortage of prime CBD retail properties available for sale and for lease, and demand is high from investors and tenants for any new properties coming onto the market.

Prime retail properties are renting for between $1,200-$1,500 per square metre and selling at yields in the 4.5-5.5 per cent range, according to Bayleys.

Secondary retail premises are far cheaper but there is a shortage of secondary retail properties for sale at present, and those that are available are bringing in yields of 4.5-6%.

The office market is being described as more subdued, and in some cases, good quality space is remaining vacant for an extended period. Rental levels are remaining unchanged as a result.

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