Hastings Napier Rents and Yields Summary Dec 2008

4/7/2009
 

Welcome to the Morice Hastings & Napier Commercial Property Market Rents & Yields Summary.
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Hastings & Napier Commercial Property Market Rents & Yields Summary

 

REPORT PERIOD ENDING DECEMBER 2008 | PUBLISHED BY MORICE LTD

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Commercial Property Resilient

Rental Growth

  • The decline in rental growth has eased in the last six months of 2008, with the All Property index showing 0% in Hastings and -0.1% in Napier.
  • The year on year figures show a 2.8% decline for Hastings and 1.5% decline for Napier which are significant movements from previous periods. The largest fall has been the office sector.

Rents

Nominal Rental Value Growth %

  July 08 - Dec 08 Dec 07 - Dec 08
  Hastings Napier Hastings Napier
Retail 0.0 0.2 -2.7 -0.9
Office 0.0 0.1 -3.2 -0.8
Industrial -0.1 -0.7 -2.7 -3.0
All Property 0.0 -0.1 -2.8 -1.5

 


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Investment Yields

  • Investment property yields continue to weaken, with the All Property Yield down 40 basis points (bp) in Hastings from June 08 finishing the year at 8%. Napier is down by 10bp over the same period.  
  • The Industrial sector is bearing up the best in the Hastings market. The retail sector has shown the greatest change and this is in stark contrast to the retail market in Napier which, due to the tight retail supply of Emerson Street, is proving the most resilient. The sector most under pressure in both cities is the office sector

Yields % Actual Yield Yield Shift
  Dec 07 Jun 08 Dec 08 6 mths to
Dec 08
12 mths to
Dec 08
  Hst Npr Hst Npr Hst Npr Hst Npr Hst Npr
Retail 6.8 6.3 7.2 6.8 7.7 6.7 0.5 -0.1 0.9 0.4
Office 7.3 6.7 7.8 7.3 8.1 7.7 0.3 0.4 0.8 1.0
Industrial 7.8 7.3 8.1 7.7 8.1 7.8 0.0 0.1 0.3 0.5
All Property 7.3 6.8 7.6 7.3 8.0 7.4 0.4 0.1 0.7 0.6

Property is now yielding over 300bp above Government Bonds in Hastings and 250bp in Napier. This yield gap should help stabilise further softening of property yields at the prime end.

  Dec 07 Jun 08 Dec 08
10 Yr Govt Bond Rate 6.46 6.42 4.88
OCR 8.25 8.25 5.00
CPI 3.20 4.00 3.40
90 Day Bank Bill Rate 8.90 8.68 5.23

The Morice average rent & yields summary property index returns are based upon a sample of actual properties that have been selected to be representative of the Hastings & Napier commercial property market. These have been valued on hypothetical terms to reflect the likely market rent for that property if let in the current market, subject to prevailing market conditions. A consistent approach with establishing relative values ensures that reliable trends and indicators can then be identified.

Commercial Property Index Returns


Year Ending 31 December 2008



Morice Hastings & Napier Index Returns
Annual Return 2008
Total Return %
Income Return %
Capital Return %

Annualised Total Return %
3-Years    5-Years
  H N H N H N   H N H N
Retail -5.1 3.8 6.9 6.6 -12.0 -2.8   13.3 14.2 19.0 19.3
Office -5.1 3.8 7.2 6.7 -11.8 -13.6   10.2 7.2 15.8 14.7
Industrial 0.5 -0.1 7.7 7.3 -7.2 -7.4   12.5 12.0 18.1 17.9
All Property -3.1 -1.1 7.2 6.9 -10.3 -7.9   12.0 11.1 17.6 17.3

*Note: H=Hastings, N=Napier

Annualised Returns 2008 3 Yrs 5 Yrs
NZSX50 Index - 32.80 -6.95 2.08
Property Equities (NZX Property Index) - 20.77 -1.80 6.35
10-Year Government Bonds 6.08 6.04 6.01
Inflation 3.40 3.10 3.00

Comparative Data

  • Investment markets across the board have experienced significant negative returns. Commercial property in both Hastings and Napier have also returned Negative All Property total return’s of -3.1% and -1.1% respectively. The retail and office sectors in Hastings have both had a challenging year producing negative total returns. In Napier the office sector has shown the weakest performance. Retail in Napier has shown the best performance out of the alternative sectors for both cities.
  • The annualised returns of 3 and 5 years are still showing good positive returns especially compared to other asset classes, but they are markedly down from last years numbers.
Country Total Return
 %
Period & Index
Australia 1.8% Year to Dec 2008
Canada 13.0% Year to Sept 2008
Ireland -34.2% Year to Dec 2008. Quarterly Index
Japan 4.8% Year to Sept 2008. *Indicative
New Zealand 10.7% Year to Sept 2008
UK -22.5% Year to Dec 2008. Monthly Index

Outlook

  • Investment markets across the board have experienced significant negative returns. Commercial property in both Hastings and Napier have also returned Negative All Property total return’s of -3.1% and -1.1% respectively. The retail and office sectors in Hastings have both had a challenging year producing negative total returns. In Napier the office sector has shown the weakest performance. Retail in Napier has shown the best performance out of the alternative sectors for both cities.

For further information please telephone (06) 835 3682 or contact via email:


Simon Dunn    simon@morice.co.nz
Brian Sides    brian@morice.co.nz

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Head to our website www.morice.co.nz
Morice LTD – 116 Vautier Street, PO Box 320, Napier 4140, New Zealand
Ph +64 6 835 3682 Email property@morice.co.nz


Data Sources: NZSX data provided by the New Zealand Stock Exchange. Securities and Commodities data provided by Bloomberg. Inflation and Bond data provided by the Reserve Bank. Global Property Returns supplied by IPD.


DISCLAIMER

Information herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy we have not verified it and make no guarantee, warranty or representation about it. The Morice index and performance numbers should not be relied upon in undertaking valuations or as a replacement for actual valuations. Morice has no liability for any losses, damages, costs or expenses suffered by any person as a result of any reliance on this information.


No part of this index may be reproduced or transmitted, in any form or by any means, without the prior written consent of Morice.

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