A study of the commercial office property market in New Zealand: 1981 - 1991

Abstract

New Zealand's commercial property market has historically experienced unspectacular levels of growth. This relatively stable, sometimes dormant market was the result of the high level of protectionism imposed over the entire economy through Government intervention that served to insulate the commercial property market from the effects of most offshore economic influences. The 1980's saw this protectionism removed resulting in New Zealand's commercial property market experiencing its first major commercial boom and bust property cycle.

This research backgrounds the factors that caused both the commercial boom and the subsequent bust, along with investigating why deregulation had such an immediate impact on New Zealand's commercial property market. As the commercial property sectors expansion is a direct result of deregulation, the main focus of the overall market analysis is on the associated implications of the new deregulatory policies on the overall New Zealand commercial property market. This is achieved by analysing both economic and commercial market indicators.

A comparison between the main commercial market indicators for New Zealand's three main commercial cities Auckland, Wellington and Christchurch is utilised to determine both the similarities and differences between these three markets over the study period. The focus here is on the different reactions of each individual market to the deregulatory change and its associated implications, these different reactions being a result of size, complexity and compositional differences between the three markets.

The different composition of the three main commercial markets is further reiterated through empirically analysing commercial sales price data for each city through the use of Multiple Regression and Discriminate Analysis models. This analysis found that the major factors determining commercial sales price in each city differ due to the complexity and composition of each market. The research results offer strong support for localised modelling and comparison as opposed to the more commonly used national modelling procedures adopted by many authors.