Commercial property is one of the safer havens in a slowing economy, Westpac analysis shows.
Its economic overview singled out office investment as one of the few sectors likely to do well in the next few years and noted it was a market segment that had performed spectacularly well lately.
Brendan O'Donovan, Westpac's chief economist, saw little prospect of any substantial correction in commercial property ahead.
"The positives for the commercial property market are many and substantial. Very low vacancy rates, limited potential supply, high construction costs elevating replacement costs, the weight of foreign capital and anticipated lower New Zealand interest rates over the coming year are but a few."
Australian superannuation and private equity funds were showing interest in the local commercial property sector.
However, O'Donovan warned that people should not see the sector as immune to the present economic slowdown.
"Clearly, the outlook is not all sunshine and roses. Yet there seems little prospect of any meaningful correction. Rather, we expect price growth to slow below rental growth, restoring yields to more normal levels."
Westpac said the housing market was harder to read, with conflicting signals emerging from monthly data. Nearly 80 per cent of New Zealanders' household wealth was tied up in residential housing.
Data had been compromised by the timing of Easter, Anzac Day and school holidays. But by March, house sales were 25 per cent below their peak and had slumped further by April. However, sales had rebounded strongly in May.
