I don’t read the paper/on-line economic news anymore as I know what it is going to tell me. We already know that inflation has skyrocketed following the quantitative easing that was required during the pandemic. It happened here, it happened almost everywhere, we knew it would.

Our Knight in shining armour takes the form of interest rate rises to extinguish the heat we are feeling from the fire of the dragon in the form of inflation hikes. We know this.

Property prices fall when interest rates go up as buyers cant majically find the extra payments if their wage has not increased by the same amount.

For example:

Loan amountInterest rateTermMonthly payments
$1,000,0003%25 years$ 4,742
$   736,0006%25 years$ 4,742

As we can see above, if the interest rate goes up from 3% to 6% (which it has) then a buyer can only afford to borrow $736k now, when last year, he/she could borrow $1M.

This will continue until inflation is quelled down to the target rate that the Governor of the Reserve Bank has set, which is between 1 and 3%.(1)

So that’s the current situation and the general feeling is that it will probably get a little worse and then stabilise over 2024. What we don’t know is what is going to happen next so we need to look at other factors that may provide a few clues.

Where do the big wigs think we are headed and where are they putting their money? The graphs below show three of the largest REIT’s (Real Estate Investment Trusts) that are listed and traded on the NZ share market.

Commercial Property

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Precinct Property – Mainly office portfolio(2)

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Kiwi Property Trust – Mainly retail portfolio(3)

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Property for Industry – Mostly Industrial portfolio(4)

Th above 3 sectors, Office, retail and Industrial show a trend not unlike the residential property price graphs over the last year…however..look at what is happening in the background.

  1. Amazon Web Services opening in 2024

‘This region will have three Availability Zones and will give AWS customers in New Zealand the ability to run workloads and store data that must remain in-country.
According to an 
economic impact study (EIS) that we released as part of this launch, we estimate that our NZ$ 7.5 billion (5.3 billion USD) investment will create 1,000 new jobs and will have an estimated economic impact of NZ$ 10.8 billion (7.7 billion USD) over the next fifteen years.’

The article goes on and states further:

‘The region would allow start-ups, enterprises, government and more to run applications and store data locally and to drive growth and innovation, as outlined by AWS’ country manager for the public sector, Tim Dacombe-Bird.’ (5)

  • ‘Takapuna’s vacancy decreased from 15.4% to 9.3%, with a few vacancies at Hurstmere Road now leased. There are still several vacancies along Lake Road, which are expected to fill up as Takapuna’s rejuvenated town centre nears completion.’
  • Retail developments include:
  • The 6,430-sqm large-format retail centre at Sylvia Park by Kiwi Property,
  • The Auckland Airport ‘Manawa Bay’ 24,000-sqm premium outlet shopping centre
  •  Lendlease’s 7,060-sqm three-level retail development planned between Dress Smart and Onehunga Mall.

All of these developments are expected to be completed by the end of 2025.(6)

  •  Office space new developments include:
  • 666 Great South Road (2,484 sqm)
  • 9-15 Marewa Rd (two buildings totalling 10,408 sqm)
  • 101 Carlton Gore Road (4,821 sqm).
  • 15,100-sqm new build by Centuria at Munroe Lane in Albany
  • 3,000-sqm high specification build at Central Park, Ellerslie which will house KiwiRail’s Auckland Integrated Rail Management Centre.   
  • Office – 223 Ponsonby Road (600 sqm)
  • Office – 4 Brown Street (2,110 sqm)
  • 19 Hopetoun Street (2,922 sqm).
  • Precinct Properties announced its new partnership with American private equity group PAG, covering two office properties at 40 and 44 Bowen Street(7)
  • Industrial developments include:
  • Wairau valley – 155 Wairau Road (5,146 sqm)
  • Rosedale – 1,000-sqm, $5.0 million industrial park development
  • North Harbour – 17,882-sqm warehouse at Bush Road, North Harbour for New Zealand Post.(8)

Developments in all sectors are on-going and even stepping up with high expectations for the near future.

Commercial trends


A trend is emerging that is showing secondary office giving way to new larger floor plate ‘employee focused’ offices. During the pandemic many employees got used to the ‘working from home’ idea and prior to the pandemic, the four-day week idea was a hit internationally.

Now in 2023 where workers are hard to find, staff are starting to make demands. I believe it won’t be long before a successful property investment in the office sector will see a building with ESG(9) principles, a floor that includes a day-care centre, possibly a doggy day care, employee perks such as health and dental care, an entertainment area (pool table/table tennis/chill out zone), plants everywhere and possibly a resident psychologist to help people deal with their feelings.

It won’t be surprising to readers that the US will lead the field in this trend and will introduce it to NZ through Amazon Web Services (AWS):

‘Financial statements filed in February show AWS NZ increased revenue year-on-year from $35.9 million in the period to the end of December 2020 to $93.8 million in 2021. Employee benefits increased from $26.1 million to $40.3 million over the same periods.’(10)


In the retail sector, large floor plates are taking the place of smaller ones, possibly due to the smaller companies not being able to absorb rising costs. JLL has reported on this in their research report:

Bulk retail performed strongly in 2022, with rent growth up 7.69% in Q4, and up 13.82% for the year. This is bucking the trend of other retail segments and supports the forecast from 2022 that bulk retail, including shopping centres, will lead the overall retail market in 2023.’(11)


Investors/developers and others in the know are gearing themselves up for a bright future. This period of time is when the money is made, its time to get to work, to prepare for what is to come. Get your systems working properly, outline your goals/plans, get ready and even make your move now.

You may consider development, relocating a house on a vacant section, building a minor dwelling, going in together with friends for buy and hold in a syndication. But do something, don’t do nothing. When the time comes, and it will within 24 months, you will wishing that you had taken some action when the prices were low.

So, be like the crouching tiger and prepare for the inevitable. 


  1. https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/inflation-and-maximum-sustainable-employment
  2. https://g.co/kgs/ZtuPwu
  3. https://www.kiwiproperty.com/corporate/investor-centre/#our-share-price
  4. https://www.propertyforindustry.co.nz/investor-centre/share-price/
  5. https://aws.amazon.com/blogs/aws/in-the-works-aws-region-in-new-zealand/
  6. Retail market snapshot | JLL New Zealand
  7. jll-research-market-snapshots-q14-office-a4-report.pdf
  8. jll-research-market-snapshots-q1-industrial-a4-report.pdf
  9. https://www.marsrealty.co.nz/do-the-right-thing
  10. https://www.reseller.co.nz/article/697622/overseas-investment-office-green-lights-amazon-nz-datacentre-region/
  11. https://www.jll.nz/en/trends-and-insights/research/retail-market-snapshot