Investors Shift Focus to New Zealand’s Resilient Real Estate Market

A significant transformation is taking place in New Zealand’s commercial real estate market as investors regain confidence and explore new opportunities. According to JLL’s New Zealand Capital Markets Report 2025, the first half of this year has experienced a notable uptick in commercial and industrial property sales, continuing the recovery that began in 2024. The report indicates that 2023 represented the lowest point for the market, with a sustained recovery now underway.

The outlook for New Zealand’s commercial and industrial property market remains positive, with indicators suggesting that growth is on the horizon as we advance through 2025 and into 2026. The report highlights a convergence of favorable fundamentals that are positioning the market for sustained growth.

Shifting Investor Sentiment

Todd Lauchlan, Managing Director of JLL New Zealand, noted a marked improvement in investor sentiment, attributing it to easing inflation, lower interest rates, and supportive government policies. “New Zealand looks like a good place to invest,” Lauchlan remarked. “People like to invest at the beginning of a new cycle, and we’re definitely at or near the bottom, starting to recover. So you see a lot of capital looking for opportunities.”

While current commercial property transaction levels remain below the 2021 peak of $7.08 billion, Lauchlan emphasized that the ongoing recovery suggests a healthy and sustainable foundation for future value and volume growth.

Auckland is particularly notable in this market shift. The city’s industrial vacancy rate currently stands at 2.8%, significantly lower than rates in Sydney (4.4%), Melbourne (5.3%), and Brisbane (4.7%). Investors are drawn to Auckland’s competitive yields, which average 5.25%, compared to Sydney’s 5.44% and Melbourne’s 5.81%.

Infrastructure and Market Dynamics

Auckland’s geographic advantages, such as limited land availability and ongoing infrastructure developments, including the City Rail Link (CRL) and improved bus networks, have bolstered investor confidence. Lauchlan pointed out that “replacement costs for new buildings are much higher than existing assets, which gives investors confidence that their value will continue to rise.”

Demand for prime office spaces remains robust, while the secondary property market, comprising older-grade buildings, is anticipated to see moderate rental growth as the economy stabilizes. The retail sector is also showing signs of resilience, with shopping centres and large-format retail adapting to evolving consumer patterns.

JLL’s report concludes that New Zealand is emerging as a strategic alternative for seasoned investors compared to Australia, thanks to a stable pricing environment and structural undersupply, particularly in the industrial sector.

Looking ahead, Lauchlan is optimistic about the future of New Zealand’s real estate market. “I think 2026 will be the best year in the last three or four — I’ve got no doubt about that,” he stated confidently.

As investor interest returns, New Zealand’s commercial real estate landscape is set to evolve, potentially offering significant opportunities for growth and investment in the coming years.