Research and Advisory
Property market research in the Queenstown-Lakes District and Otago
Contracted by developers, investors and agencies requiring property-based advisory services, our specialist team draw upon an unsurpassed knowledge and experience base across residential, commercial and rural property types.
In feasibility analysis, strategy and transaction advisory and consulting services, Colliers Otago lead the way throughout Otago, Central Otago and Southland. Areas of research may include:
- Market review
- Rent review
- Demand drivers
- Competitor analysis
- Market influences
- Buyer profile
- Rental market analysis
- Asset management recommendations
- Product placement strategy
- Achievable pricing & valuation
- Macro and micro economic factors
Key research pieces
Every year the Colliers Otago team undertake key research activities to benchmark the local Dunedin, Wānaka and Queenstown property markets including valuations, buyer profiles and competitor analysis. This research provides information for our future reports, and informs the business community on changing trends. Contact us for more information on our real estate research resources.
Otago Market Review & Outlook 2023/24
Multiple sectors of the Otago property market are showing resilience, despite the economic headwinds of 2023, according to the latest research from Colliers.
The Otago Market Review & Outlook 2023/24 gives an overview of residential, commercial, and industrial markets across the Otago region.
“The New Zealand residential property market has seen a shift following a period of dramatic price escalation, largely driven by OCR increases, resulting in rapidly rising mortgage costs. Queenstown continues to buck the national trend with values holding through the first half of 2023,” Beard says.
“The Wānaka market has stabilised particularly in the entry level to mid value range sector. In both markets, migration to the region appears to be increasing with rental property stock shortages and increasing rental levels across the region.”
The review also showed that in Dunedin buyer demand remains strong with reliance on the health and academic sectors undertaking large scale capital work underpinning the demand for housing.
The Queenstown CBD has an improved streetscape following prolonged construction and several major leases have been signed with global brand name tenants cementing Queenstown’s status as an international resort destination.
Queenstown office occupiers continue a trend of migration to Frankton for new office supply. The Frankton industrial property market continues to display a lack of supply amid growing demand due to constrained land availability.
“In both Wānaka and Queenstown, commercial property continues to be tightly held. However, we expect a stabilisation of yields due to macroeconomic factors to continue to influence the region,” Beard says.
“Cromwell’s commercial and industrial markets remain healthy with high occupancy levels and increasing levels for industrial property with Cromwell leveraging its Central Otago hub status and ability to service the wider region.”
In Dunedin, the retail market remains strong with high tenant demand for bulk retail space. Office rents for Dunedin CBD continue to grow and industrial space remains scarce especially in the inner city. The shortage of available development sites is unlikely to ease in the short-term due to geographical constraints and limited freehold land.
Headwinds prevail in the current economic environment, however the overall property market in the Otago region remains resilient with growth expected in the tourism sector.
The full Otago Market Review & Outlook 2023/24 click to view.
Market Report 2022-2023
Changes in sentiment are beginning to affect the key Otago property markets of Queenstown, Dunedin, Wānaka and Cromwell, although many sectors of the market remain in good health, according to new research from Colliers.
Our annual 2022-2023 Otago Market Review & Outlook explores how the region’s key property markets are expected to weather upcoming headwinds, in light of the extremely strong positions many sectors of the market have come from over recent years.
Heather Beard, Valuation Director in Colliers’ Queenstown office, says a number of factors point to the property market consolidating, in particular for households with the dual challenges of interest rate hikes and increases in the cost of living.
“Any sharp increases in interest rates will compound the unaffordability of mortgages in the region, particularly where high mortgage to income ratios are in play. Those homeowners who have purchased recently and are highly leveraged are at risk of falling into negative equity.”
Interest rate rises are likely to increase investors’ yield expectations across the property market. However, in the commercial property sector, the significant weight of capital still seeking investments continues to keep yields low.
“Prime commercial property generally remains strong across the region with the scarcity of developable land a key factor behind the robustness of the commercial sector.”
Those holding higher quality property will fare better in the face of fluctuations in sentiment, she says.
“Prime property is expected to perform best in the case of a market downturn, with secondary property generally more exposed to the headwinds and risks facing the market.”
The Queenstown property market has historically been slower to react to downturns compared with other main centres in New Zealand, and the market also comes from a position of high value levels. Among the trends expected to underpin the Queenstown property market are the tourism restart and increased numbers of people opting to move to Queenstown and work remotely. To date, Queenstown appears to be resisting the national trend of downward pressure on house prices.
The Queenstown residential market is currently characterised by reduced numbers of listings as homeowners wait out the current period of uncertainty, resulting in decreasing sales volumes. Commercial & industrial property in Queenstown is generally still in a recovery phase following Covid-19, but confidence is still strongly apparent and increased pressure could come on yields.
The Dunedin property market has also shifted to a climate of uncertainty in 2022. A softening of residential property values characterises the market, following significant increases in values over the past five years. Sales volumes are down and homes are taking longer to sell, with the downturn apparent across all value levels.
Confidence in the commercial property market is also more subdued, although the market remains heated in a historic context. Large-scale investment in the new hospital build and university campus development continues to underpin the local economy.
The return of international tourism is expected to help cushion the Wānaka economy. Staff shortages are a challenge to tourism and hospitality businesses facing increased customer demand due to a very strong start to the 2022 winter season.
A two-tier market is apparent in residential property, with the upper end performing strongly under ongoing high demand and the lower end receiving limited demand with properties taking longer to sell. Commercial property continues to perform well as high demand meets limited availability of investments and a shortage of new supply.
Call into one of our offices to pick up your copy of the report.
Market Report 2021-2022
Queenstown’s property market remains resilient despite another year of Covid-related interruptions.
Population growth and a positive property market sentiment provide confidence in Queenstown’s long-term prospects as the area shows signs of maturing from a centre focused heavily on tourism to one encompassing a more diverse collection of industries.
That’s according to Colliers’ newly-released Otago Market Review and Outlook 2021-2022, which covers the key markets of Queenstown, Wānaka, Cromwell and Dunedin.
Heather Beard, Director of Valuation at Colliers Queenstown, says that despite a predicted downturn, demand continues to outweigh supply in the resilient Queenstown residential market with sales prices hitting record highs and clear evidence of consistently elevated demand.
“This is in part due to new residents moving to the regions, including ex-pats returning home. For some, lockdowns brought to light the importance of living in a place with opportunities for outdoor experiences and lifestyle options and, along with the increasing acceptance of remote working, this has made the Queenstown-Lakes District appealing.
“Increased demand and value appreciation is being seen in higher density neighbourhoods, with new homes generally taking precedence over older stock, particularly with investors due to new government regulations. This has left room for the first home buyer market to take on and add value to the district’s more established property stock.
“Despite the property market performing strongly, some risk remains with the increasing OCR flowing onto an increase in interest rates for mortgage holders.
“In the commercial market, we are also seeing some strong transactions in particular for centrally-located assets, suggesting a high level of confidence in the CBD market, though some vacancies have appeared in secondary and fringe areas. A return to pre-pandemic levels of business is anticipated in the long term, and projected visitor and population growth figures from QLDC back up this assumption”, says Beard.
“Ongoing border closures, CBD roadworks and parking issues have seen some tenants end their tenure in the CBD, with some choosing to move to Frankton. Many locals are choosing to shop in the Frankton area due to its convenience to established and high-growth residential neighbourhoods.
“While the ongoing lockdown in Auckland has taken a toll on the hotel and tourism property sectors, demand for tourism properties has remained strong, again with a focus on central CBD positions. Three new hotels are due to open across the Whakatipu Basin in the next 6 months. The market also remains active for properties with development potential.”
- Wānaka’s residential property market remains strong, with reduced time on the market for listings across all sectors. Housing stock is low with limited greenfield developments on the horizon, pushing up the price of existing properties and land.
- Wānaka’s commercial property market remains strong, with demand outweighing supply. Activity is primarily underpinned by the local market with a limited number of tourism operators in the CBD. Ongoing border closures have not greatly impacted Wānaka’s commercial market.
- Cromwell’s steady growth continues as it maintains its role as a central hub in the region. The Central Otago District Council has dedicated $42 million to developing the Arts, Culture and Heritage Precinct and upgrading the town centre, which may further increase its popularity for residents and businesses.
- A new industrial estate for Cromwell will meet the high demand for centrally located industry in the area. New vineyard developments are also emerging to meet the demand for quality Central Otago wines.
- Dunedin’s property market has not been adversely affected by the pandemic, with increased student enrolments and population growth boosting demand.
- Major capital works in the pipeline are ensuring the continuation of the southern city’s popularity as a place to live and work. While there is little in the way of industrial development, some new commercial properties are in construction, a rarity for Dunedin.
Further regional insights are available in the full Colliers Otago Market Review and Outlook 2021-22.
Market Report 2020-2021
Queenstown’s property market has changed significantly in the wake of the global Covid-19 pandemic but has proved remarkably resilient, with confidence growing again and big infrastructure spending in the pipeline.
That’s according to Colliers' newly released Otago Market Review and Outlook 2020-2021, which covers the key markets of Queenstown, Wānaka, Cromwell and Dunedin.
Heather Beard, Registered Valuer and Consultant at Colliers Queenstown, says the fundamental driver of Queenstown’s growth over the past decade has been tourism.
“Queenstown’s property market has been impacted by border closures and economic uncertainty since the Covid-19 lockdown, with questions remaining around when international tourism may resume.
“The silver lining is government investment in the region’s much-needed infrastructure projects. The $85 million earmarked for ‘shovel ready’ projects in Queenstown will assist in recovery and further growth following the international border re-opening.
“In the short term, reliance on domestic travel and related spending levels, plus a tightening on funding, will likely continue to create a degree of uncertainty in the property market.
“However, the Queenstown property market has proved to be remarkably resilient with current market sentiment and council population growth projections showing confidence in Queenstown’s longer-term prospects.”
Beard says some overall market trends include low interest rates driving property investment, as investors seek returns, and a negative OCR predicted from early 2021.
James O’Hagan, Managing Director of Colliers Otago, says an expected downturn in the housing market did not materialise – at least not to the extent predicted.
“Sales volumes are down for the year due to periods of inactivity, but market transactions have been picking up significantly post-lockdown.
“The market has been buoyed by low interest rates and pent-up demand, particularly from first home buyers, holiday home investors and people relocating for lifestyle reasons.
In Queenstown’s commercial property market, Beard says rental affordability has been a hot topic with the absence of international tourists in the CBD.
“New leasing activity appears to be at pre-Covid levels and demand in the prime retail area is continuing, with some tenants taking the opportunity to reposition or enter the market.
Beard says the industrial sector remains a sought-after investment in Queenstown and nationwide, as investors gravitate towards ‘essential business’ tenants.
In the tourism sector, two new CBD hotels have recently been completed while four further hotels are under construction and one has been put on hold. Queenstown’s hotel supply is now 3,831 rooms, with a further 569 under construction, 2,460 consented and 1,481 in the consent process.
Elsewhere in Otago:
- Wānaka’s residential property market has experienced significant growth over the past five to seven years and appears to be maintaining value levels post-Covid, despite recent predictions;
- Wānaka’s commercial property is primarily underpinned by the local market, with a limited number of tourism operators in the town centre. As a result, the withdrawal of international tourism and ongoing border closures appear to be causing a less significant impact on Wānaka than they have on Queenstown;
- Cromwell’s residential and lifestyle property markets are performing strongly, fuelled by growth in the rural/agribusiness, viticulture, horticulture and commercial sectors;
- Cromwell also has significant new commercial supply in the pipeline, while there is a shortage of good quality industrial space, with owner-occupiers leading the market;
- Dunedin’s residential property values are holding at a high level with limited volume of stock available. A trend of yield compression is continuing in the residential investment market, as investors seek higher returns through acquiring property assets;
- Dunedin’s commercial property market has also been marked by this trend, with good tenant and investor demand for office stock. With cruise ship activity down due to border closures, limited upcoming events and subdued domestic tourism, the tourism, retail and hospitality markets may see some consolidation in the short term.
Further regional insights are available in the Colliers full Otago Market Review and Outlook 2020-2021.
Colliers' annual Queenstown CBD Pedestrian Count survey has recorded almost exactly the same number of people pounding the pavements in central Queenstown as on the same day in 2018, in contrast to the large increase recorded between the 2017 and record-breaking 2018 surveys.
2019’s count, recorded on Wednesday March 13 at 10am, 3pm and 8pm, was down 0.1% overall on 2018. However, both the 10am and 3pm counts were up on last year.
Heather Beard, Colliers Queenstown director, says this result is interesting, especially in the case of the 3pm count – given the absence of high school students in the town centre and the fact it was raining.
“At 3pm we had two factors that could have been expected to result in a much lower count than last year. Following Wakatipu High School’s move to Frankton Flats last year, there are generally no high school students in the town centre at 3pm any more. Rain during the 3pm count is likely to also have resulted in fewer pedestrians being counted,” she says.
“Given the 3pm count was actually up on 2018, this could potentially point to an effective increase in the number of visitors and residents in the town centre, with these groups making up for the absence of school students and also taking into account the rain factor.”
Colliers’ pedestrian count usually mirrors and reinforces tourism growth patterns in Queenstown and 2019 displayed a continuation of this trend.
While the pace of growth in guest nights in Queenstown has slowed from the highs of 2016, there was still 2.9% growth in guest nights over the year to November 2018 compared with the previous year, according to StatsNZ’s latest Commercial Accommodation Monitor. There were 3,670,417 guest nights in Queenstown during the year to November 2018.
“Tourism is still one of the strongest factors affecting the property market in central Queenstown. This results in very high demand for retail premises, with restricted supply. There is currently zero vacancy in ground floor retail property in central Queenstown. As a result, retail space is still commanding very high rents and there are also very few sales of prime commercial property in the CBD as owners hold on to their assets,” says Beard.
Once again, central Camp Street (outside O’Connells Mall) had the highest volume of foot traffic in 2019. This location has occupied the number one spot in Colliers’ survey for 15 consecutive years.
Three spots on Camp Street made the top five spots this year, which could be a reflection of the bus network implemented in late 2017 with bus stops on both sides of Camp Street.
Central Church Street (on the eastern side of the street) had a huge increase in foot traffic of over 140%, while Lower Beach Street near the Earnslaw Park toilets was up over 100%.
By contrast, East Camp Street (outside the former post office) had a significant decrease in pedestrians since last year, which could be explained by the post office’s move.
Colliers’ survey is taken in March every year at 31 locations around the CBD, with pedestrian movements counted over half-hour periods at 10am, 3pm and 8pm.
The 10 busiest spots in central Queenstown were:
- Central Camp St (O’Connells/McCafe)
- Lower Beach St (toilets)
- East Camp St (Just Jeans)
- Camp Street (Happy Travels, formerly Subway)
- Central Shotover St (Huffer)
- West Rees St (Kathmandu)
- West Rees St (Ugg)
- Central Rees St (Pog Mahones)
- Central Mall (Max)
- Upper Beach St (T2)
Market report 2019-2020
Following an unusually prolonged period of growth, the Queenstown property market appears to be taking a breather – although there are many signs pointing to several areas of the market remaining at elevated levels for some time to come.
This trend, among other current dynamics in the resort town’s property market, are discussed in Colliers International’s 2019-2020 Otago Market Review and Outlook, released June 14 2019.
The apparent changes in the market mean this year’s annual review was one of the more challenging the Colliers International team has researched and produced in at least the past five years, says valuation director John Scobie.
“We had many in-depth and interesting discussions with our valuation and agency teams and external experts about the current state of the market and its expected future direction while we were putting this year’s report together,” Scobie says.
“Whereas for much of the past five years or so there’s been no question about the staying power of the property market peak, this year we had some highly engaging and robust debate around the clear evidence that some parts of the market, such as residential property, are showing signs of levelling off.”
Commercial, retail, industrial and tourism-related property remain strong performers, especially town centre retail & commercial and Frankton industrial. Factors including expected population growth, ongoing construction activity and tourism are continuing to underpin property values and rents in these sectors.
Meanwhile, in the residential market the balance of power is expected to shift to purchasers in 2019-2020, with value appreciation tapering off and a period of consolidation likely.
“It’s important to note that while there has been a change in residential market dynamics, overall the Queenstown property market remains steady,” says Scobie.
“There is still plenty of demand in the market driven by tourism, the area’s growing population and the ongoing construction boom – but we are now expecting any further growth to occur at a more moderate pace than we’ve seen in recent years.”
Specialist research pieces are produced in-house and by our national and global research teams. Read the latest here.