Property investment returns, a comparison by property sector

Abstract

A comparison of Property Investment Returns on a "Total Capital", "Pre-Tax" basis using a ten year study period comprising the calendar years 1989 to 1998 inclusive.

Primary data was collected for a sample of 18 properties in and around Warkworth Township. Warkworth is a provincial service town situated approximately 65 km north of Auckland City, New Zealand.

The study was based upon primary data. For the Industrial and Commercial sectors data was sourced directly from lease documents along with interviewing property owners, lessees or relevant property managers etc where necessary. Data for the Residential sector was more difficult to obtain and was often provided more from owners' and property managers' memories rather than exact records such as the lease documentation available for commercial and industrial properties.

Although not formally recognised as an investment sector in its own right, a "Prime Beachfront Section" sector was included in the study in response to a significant number of requests for information on how this property sector performs in relation to the other more generally recognised investment sectors. The results have been compiled using the "Discounted Cash flow" technique showing an Internal Rate of Return for each property on an annual basis. The results are also compared to the performance of Bonds and Equities over a similar time span.