Commercial property plummeting

New Zealand CBD offices returned -5.2% to June 2009, having fallen almost a whopping 20% from the 14.7% positive return posted the same time last year.

The Property Council cites the main driver for negative returns was the continuing writedowns of property values in June valuations. Capital growth for CBD offices fell to -11.6% in the 12 months to June, the lowest recorded since 1993.

Income returns have also offset capital losses and have risen slightly to 7.2% for the year to June.

A combination of softer cap rates and an anticipated softening of demand has accelerated the pace of capital depreciation over the last quarter, from the -6.6% recorded over the 12 months to March. Auckland CBD offices have been hit harder than Wellington's, having fallen to -13% compared to the capital's -10.3%.