Resilience needed in face of change
In its latest Financial Stability Report (FSR), which was released Wednesday, the Reserve Bank says commercial property – especially accommodation, hospitality, retail, and some office properties – was immediately affected by Covid-19 prompted travel restrictions and the alert level four measures.
“Many property owners have proactively offered rent reductions to support tenants during the downturn, but a prolonged economic slump will put downward pressure on rents and lead to increases in vacancy rates.”
The report says current development pipelines also indicate that an above-average volume of retail and accommodation space is due to be delivered over the next year in the Auckland and Queenstown markets
“Demand may therefore struggle to keep pace with this increased supply, and the viability of some commercial property loans will be called into question.”
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