Dunedin and Queenstown offer two differing views, the former described as a cruise ship ploughing through the recession and the latter an America's 's Cup yacht, battling an up-wind beat.
More than 50 investors and southern property developers attended a Colliers International briefing in Dunedin on the commercial property market yesterday, hearing some sobering data on prices which have slipped more than 60% and a implications of receiverships and stock yet to come on the market.
The Queenstown apartment market was hit hard by the failure or moratoriums placed on many finance companies during the past two years and Colliers Queenstown director Alastair Wood said receivers had been "very patient" in waiting to place apartments on the market.
During the next 12 to 24 months he expected $125 million to $150 million of apartments to be released for sale.
Mr Ward gave examples where in Queenstown one property which had sold for $6.5 million, plus GST, recently sold for $4.5 million and another in Wanaka, was similarly down more than 60% from a previous sale of $3 million to $1 million.
"Over the next 12 months we expect [the market] to be flat through 2010, with no change," Mr Ward said.
He expected to see more "troubled assets" put up for sale by financiers this year and with the withdrawal of large listed companies from the market, the "appetite of private investors" would be tested by the "flood of opportunity", Colliers said in a research report released yesterday.
Mr Ward drew the cruise ship and America's Cup analogy, saying while Dunedin "kept on" in stormy times, Queenstown had "struggled" in the face of financing woes, especially affecting the construction sector, which was in downturn.
Separate economic data released recently prompted the Queenstown Chamber of Commerce this week to highlight the problem that Otago developers were finding it difficult to obtain bank funding for Queenstown, with the demise of finance companies.
Stephen Cairns, of Colliers in Dunedin, said the "receiverships and distress scenarios" in Dunedin had been at the low-end of the national scale, compared to repossessions and mortgagee sales in Queenstown, Christchurch and Auckland.
During 2009 Dunedin had been "reasonably resilient" and Colliers had achieved its targets, Mr Cairns expected 2010 to be similar but flat, as investor sentiment "was still negative".
While it was a "buyer's market" for higher-risk buildings, on short lease or not being high-profile sites, those wanting passive, prime sites with long leases had several options in Dunedin.
"There still remains good demand for sites, [valued] up to $2 million," Mr Cairns said.
Colliers International's latest quarterly commercial property confidence survey revealed overall confidence levels had dropped since the most recent survey in December, particularly in the main centres.
"We expect the recovery in smaller markets to continue but, like the wider economy, it will be patchy and quite slow. Investors can see the light at the end of the tunnel in every town and city, but the length of the tunnel and the speed of the train vary widely," the Colliers survey reported.
However, optimism was growing outside the main centres, in Nelson, Queenstown and Dunedin, which were all more positive than in December 2009.
The largest improvement in confidence was in Queenstown, from -20% to -15%, with Dunedin at -16% and Nelson -1%.
