The property market has remained resilient despite the impacts of the COVID-19 pandemic on the sector – and property values at Auckland CBD are holding up well with plenty of development and investment coming up, according to New Zealand Mortgages & Securities (NZMS).
NZMS director James Kellow said the central city took a significant blow not from the economic fallout from the pandemic but from the City Rail Link and other major infrastructure projections that have effectively closed off large parts of the CBD.
“Downtown Auckland will bounce back and continue to reinvent itself as it always has. Once upon time council prohibited people from living there, then it was filled up with international students, backpackers, and Airbnbs. Now we have high-grade apartments and a 5-star Park Hyatt in Wynyard Quarter. Twenty years ago, the bottom of Queen Street was littered with $2 shops, then in came Gucci and other labels. Change is the only certainty,” Kellow said.
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Kellow predicts that the need for quality commercial office space will not diminish despite many companies going digital as a result of the COVID-19 lockdown, and commercial property owners and investors would not abandon the city as property asset values continue to increase.
“Sure, some consultants and some smaller SMEs have exchanged their leases for the kitchen table, but serious businesses can't do this. They need the personal interaction, workplace engagement, and sharing of ideas. They'll keep demanding high-quality, well-located office space, and developers will keep building it with obsolete buildings then repurposed,” he continued.
“Where else are [property owners and investors] going to put their money? Property asset values continue to increase, and sure rental yields are now well below 5%, but that's still considerably higher than bank deposit rates which are now converging on zero. We're not seeing headlines about big buildings in the central city changing ownership because they're not for sale.”