Desire by tenants to upgrade fuels need for top-class space
Demand for office space at the top end of the market in Christchurch has been steady, driven by tenants upgrading from lower category buildings, according to real estate company Richard Ellis.
It said the service sector had remained relatively resilient in the face of a general economic downturn during the past year.
Office vacancy rates in Christchurch have been fairly stable in the last year but analysts said there would be a shortage of space in the grade A and B market once the Price Waterhouse Centre was fully taken up.
Office rental rates have climbed in the last year for the better buildings but grade C and D premises are continuing to suffer, especially those without car parking.
Yields in office buildings would remain static over the next 12 months and would only recover once vacancy levels declined, analysts said.
In the hotel sector, occupancy rates for Christchurch's three to five-star market were 66.9 per cent for the year to May against 64.3 per cent a year earlier, they said.
However, new hotels might need to cut the room rates substantially in a bid to achieve a reasonable occupancy and strengthen their market share.
Demand for hotel rooms has been positive this year as visitor arrivals grew 2.6 per cent for the year ended May.
Room nights sold have increased by an average of 9.8 per cent in the three to five-star market in major tourism centres.
Strong demand emerged for modern industrial buildings, selling for up to NZ$1 million (HK$4.86 million), but properties selling for more than NZ$2 million were less attractive, Richard Ellis said.