Auckland and Wellington rise in global office rent rankings
Auckland ranks 54th in global office rent rankings.
Auckland is 54th and Wellington is 73rd in relation to world prime net office rent rankings according the latest Colliers International Global Office Survey of more than 150 cities.
The latest rankings are slightly ahead of June 2015 rankings of 61st and 84th respectively.
“Rental growth of around 3 per cent over the past six months in Auckland and Wellington in local currency rates were boosted by a slightly higher exchange rate at the time of the surveys and this assisted with our increase in rankings,” the survey states.
“With average prime yields of 7.1 per cent for Auckland and 7.7 per cent for Wellington this places us in a select group of office markets. Interest rates are much lower in most major countries, but the gap between local interest rates and yields are remarkably similar at around 2 per cent to 3 per cent, similar to Auckland and Wellington.”
According to the Colliers’ survey New Zealand’s economic and population growth rates, benign tax regime, transparency, political stability and asset appreciation are all factors contributing to a strong outlook among international investors.
The report says Auckland and Wellington experienced capital value growth of 4.4 per cent and 6.6 per cent respectively over the last six months.
Wellington is well down the global list at 73rd in relation to rental costs.
“The ‘lower for longer’ interest rate environment, growing economy, supportive fundamentals and a growing number of hungry local and offshore purchasers for New Zealand office stock augur well for investment activity in 2016.”
Similar to Auckland and Wellington, the top 10 markets all experienced the same or rising rents in local currency, but the US dollar exchange rate saw some markets lose ground.
With net office rent at almost eight times the rate of Auckland, the top rent income spot was taken by Hong Kong with an impressive NZ$2911 per sq m per annum. Hong Kong’s rent was also up 12 per cent in the last six months and up 18 per cent for the year.
The cost of renting didn’t dampen demand for top-end space in Hong Kong which remains strong for A-grade vacancy at 1.7 per cent.
However, Auckland CBD’s prime vacancy rate of just 1.2 per cent remains one of the lowest in the Asia Pacific.
“Globally, investment interests in the major gateway cities continue to be strong as investors chase high yielding assets in an environment of low inflation and interest rates,” Colliers International says.