Commercial property gains ground

The commercial property sector has recorded a positive annual return for the first time since 2008, but the European debt crisis could slow the pace of growth, experts say.

The Property Council/IPD index to March 2010 shows annual returns for the sector were 2.4 per cent, including an 8.1 per cent income return and a -5.3 per cent capital return.

This compared to -1.6 per cent total annualised return to December 2009.

IPD Australia and New Zealand managing director Dr Anthony De Francesco said the latest results reflected an early recovery cycle for the commercial property market.

New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said the economy was recovering and past the worst, but the outlook was cautious.

The global economic situation was the most pertinent medium-term risk, affecting the availability and price of credit, but also the pace of global growth and exports, he said.

"Commercial property remains vulnerable because it lags the cycle," he said.

- Herald Online