16 Aug 2012

Property investor confident of strong Auckland market

9:03 am on 16 August 2012

Commercial office property investor, AMP New Zealand Office Trust is expecting the Auckland market to continue to rebound while Wellington will remain stable.

AMP's profit quadrupled in the year to $45.1 million to the end of June.

The company's portfolio gained $5.5 million in value, a reversal of the previous year's $36 million fall.

AMP chief executive Scott Pritchard says occupancy rate is 94% and AMP's weighted average lease term has risen to 5.9 years from 4.3 two years ago.

He says that has taken a lot of risk out of the market, which is what investors are looking for.

The company has even exposure to Auckland and Wellington.

Mr Pritchard says Auckland is outperforming the capital and he expects that trend to continue.

He says Auckland, as a region, has strong population growth and low interest rates should encourage more activity.

Mr Pritchard says the view is that the number of buildings available in Wellington is likely to decrease because they will either need earthquake strengthening or they will not be available for lease.

He says with a reduction in supply the Wellington market should at least remain stable and there is the potential for some growth in rents.

Mr Pritchard says hopefully at this time next year there will still be positive revaluation gains, but it's difficult to forecast valuations because they are impacted by wider economic variables.

He says AMP will change its name and branding which will be announced next month.

He says the firm has leveraged off the household name for a long time but it is now the 14th biggest company listed on the stock exchange and its time it got its own identity.