A Forsyth Barr analyst is forecasting an annual return of 10% to 11% for investors in the listed commercial property sector.
Senior equity analyst Jeremy Simpson says the sector has passed its worst and is slowly recovering, with occupancy now at about 96%.
He says occupancy has increased over the past one to two years and landlords are not having to pay tenants to retain them or to attract new tenants as much as in the past.
However, although there is a little more demand for space, earnings growth is not rapid and property companies are not earning as fast as the broader equity market would be.
Mr Simpson says New Zealand's recovery is slow, and there is a lag between when businesses start hiring and when they want more space, or have the confidence to trade up to better space and pay more rent.
"There's also a lag for when rents typically start to really recover - that tends to happen later in the cycle."
Mr Simpson says earthquake strengthening of commercial buildings is an issue, but in Wellington it tends to be contained mostly within C and D grade office buildings.
"Most of the prime A grade properties are in fairly good shape. In terms of the listed sector there's not a lot of exposure except for Precinct Properties ... but by and large their assets are very high quality and well positioned for the high end of the corporate market or positioned for the government market."
He says the projected return of 10% - 11% is solid, but not spectacular.
By comparison, a long-term deposit with Westpac Bank would give investors a return of less than 4%.
The best performing listed property companies for August were two of the country's largest - Goodman Property Trust and Precinct Properties.