Commercial Commentary July 2025

When we look just at the numbers there are encouraging signs of recovery in the NZ economy. Interest rates are down, GDP is slightly up for the first six months and inflation is within the Reserve Bank guidelines. The counter factor is overseas volatility arising from the US initiated tariff war and the escalation in some of the conflict areas. So domestic demand is patchy, and business confidence is cautious.

Even though we have had consistent lowering of the OCR and matching interest rate drops since late last year, the effect of these are not expected to be truly felt until later this year. The government has tried to provide some stimulus to the commercial sector by introducing a tax incentive on productive assets. A deduction of 20% of the new asset value can be deducted with the balance being subject to the normal depreciation regime.

The consented new industrial build area at the end of the first quarter of 2025 was down 35% on the post Covid peak in 2022. Retail space had declined by even more, but with some confidence, expectation is to see a gradual recovery in particular within the industrial sector.

There have been six commercial sales registered in the six months to June 2025, two of which appear to have been owner initiated entity changes. Sales values have been between 7-15% over CV.

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