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Focus now turns to 2021

Commercial

Property Brokers 16 Dec 2020

Blog-image_Marty-Love-CommercialWith the general election now over, businesses should find comfort in the promises made by the Government to invest, assist and support people, businesses and projects in the medium to long term, as well as putting the country in a stronger position within the global export markets

The highly anticipated implications of COVID-19 have not been as dramatic as many would have expected, although New Zealanders are still being warned to prepare for a recession during 2021. The economy has dealt with and bounced back significantly well from the initial lockdown periods, however the economy continues to remain vulnerable, and businesses are being warned to expect more tough times heading into the new year.

 

Economists are expecting GDP quarters to fall three times throughout 2021 despite experiencing positive growth during the September and December quarters this year. However, investment in commercial property is not necessarily seen as undesirable as the directive of RBNZ has slashed the OCR to a record low of 0.25%, which means interest on borrowing has significantly decreased.

 

Many office-based businesses have seen adjustments to expectations endured from the COVID-19 lockdown and the ability to work digitally from home. The idea of working from home has been questionable in recent years, although many businesses saw great success during the lockdown period without loss of productivity.

 

Many businesses are introducing strategies that encourage employees to work from home as productivity increases due to less time spent commuting while being able to minimise overhead costs related to office-based expenses. Combining these factors with the rising rate of unemployment has resulted in increased vacancy rates throughout the country.

 

The retail sector initially saw the greatest impacts resulting from COVID-19. Contributing factors for this were due to decreases in quarterly spending, and restrictions placed on consumer movement and transport earlier in the year. However, consumer confidence has rebounded positively in recent months, which has created a more positive outlook for the retail sector heading into 2021.

 

In spite of COVID-19, the industrial sector has continued to show significant resilience against current market conditions. Escalating demand and scarce supply factors have meant the industrial sector has been able to maintain strong performances across the country. Although, with a particular level of uncertainty in respect of what 2021 will bring and the possibility of a recession, the industrial sector has been warned not to get too complacent as there is still a significant level of COVID-19 related impacts to come.


With this being said, industrial businesses should find confidence in evidence that suggests sub-four percent yields, and a record-high number of building consents issued within the industry through September.

 

In summary, with the outlook for 2021 looking unpredictable for all, each sector is encouraged to remain positive and optimistic. With the general election now over, businesses should find comfort in the promises made by the Government to invest, assist and support people, businesses and projects in the medium to long term, as well as putting the country in a stronger position within the global export markets.

 


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