In our Live Webinar: How To Invest Smarter in New Zealand’s Property Market, we’re joined by Scott O’Neill, Michael Vincent, and Dylan Menzies to break down the opportunities emerging across New Zealand’s commercial market. With interest rates falling, yields holding, and pricing still in a rare holding pattern, the group explores what it really means to invest smarter in New Zealand’s property market and where investors should focus next.
Why This Is the Moment to Invest Smarter in New Zealand’s Property Market
The current environment is defined by one thing: a favourable mismatch between borrowing costs and returns. As Scott O’Neill explains, “It’s all down the reverse… the numbers look good, so people follow the numbers.” New Zealand’s commercial interest rates have dropped from around 9–10% to the mid-5s, while yields have not yet compressed to match.
Michael Vincent calls this a unique phase of the cycle:
“Rates have come down but prices haven’t skyrocketed. We’re in this weird flux… it’s definitely a time to look at investing.”
This is also a turning point for long-term residential investors. Many portfolios built over the last decade aren’t delivering the cash flow needed for retirement or financial independence. As Michael puts it: “If you want cash flow in retirement, you’re not getting that out of a two-bedroom townhouse in Christchurch.”
in New Zealand’s Property Market
Commercial property isn’t one monolithic category. The ability to invest smarter comes from understanding the individual sectors and the tenants behind each one.
Industrial
Industrial demand is being driven by e-commerce growth, rising construction costs, and low vacancy. Dylan Menzies summarises the strength of the sector simply:
“Industrial is growing at a rapid rate… there are a thousand uses for industrial and they’re growing as well.”
Retail
Retail performance depends entirely on the tenant. Scott O’Neill explains why selectivity matters:
“Would you target a high-end fashion store? Probably not. But a pharmacy or supermarket? Absolutely.”
The sector is rebounding from its Covid trough, with yields still attractive.
Office
Office performance diverges sharply between sub-sectors. B-grade CBD stock continues to struggle, but A-grade and regional office are holding strong. Scott notes:
“There’s a flight toward quality… A-grade is performing well.”
Specialist Assets
Medical, radiology, dentists and childcare remain highly sought-after due to their tenant stickiness. As Scott points out:
“A big dentist with a million-dollar fit-out on a ten-year lease? It’s as good as a bond.”
The Lending Landscape: Why Funding Is Getting Easier
One of the most significant shifts – and one that determines how easily investors can take advantage of opportunities – is the return of bank appetite.
Michael Vincent describes the shift from a “cold winter” to renewed competition among lenders. Commercial floating rates have fallen into the mid-5% range, and major banks are once again willing to fund good-quality assets, even issuing longer terms and increasing maximum leverage.
“It’s as good as it’s been in 5–6 years,” he explains, highlighting the change in sentiment.
Banks are particularly supportive of assets with:
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strong lease covenants
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multi-tenancy risks mitigated
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essential-service or stable tenants
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A-grade or regionally strategic locations
This matters because cheaper funding directly lifts cash flow and widens the gap between yield and interest cost – one of the core reasons commercial property is so attractive right now.
Non-bank lenders are also playing an important transitional role. As Michael notes:
“If you have to go non-bank for six months while something gets remediated, then you go straight back to a main bank. Kiwis turn their nose up at that, but Australians don’t.”
This flexibility allows investors to move faster in a market where timing matters.
The Case for Regional Markets and Replacement Value
While international headlines tend to focus on Auckland, it’s clear that regional markets – particularly Christchurch – are a major opportunity.
Dylan outlines the logic behind secondary markets:
“We’re buying property cheaper than replacement value… as development comes, developers will need to charge rents 40-50% higher. That lets secondary stock lift rents too.”
Christchurch is a prime example:
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strong population and residential growth
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industrial expansion
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attractive yields
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cheaper-than-replacement construction costs
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lower vacancy risk in key corridors
For investors wanting long-term income paired with growth potential, these markets offer significant room for uplift.
Why Investors Are Shifting From Residential to Commercial
The divergence between the two asset classes continues to grow. Michael Vincent sums it up directly:
“Housing is always political. Rental caps, tenancy restrictions… it’s going to be a bigger and bigger problem for the residential market.”
Commercial tenants, by contrast:
As Scott explains:
“Businesses have to look good for their customers… that’s why you get recoverable outgoings in commercial.”
Offshore capital adds another stabilising layer. Investors from Singapore, the US, Canada, and Australia continue to enter the New Zealand market because, as Michael says:
“New Zealand is a safe haven.”
Key Takeaways
- Falling interest rates and stable yields have created a rare entry window.
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Industrial and specialist assets remain strong long-term performers.
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A-grade and regional office assets continue to outperform.
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Lending conditions have materially improved, enabling easier entry.
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Regional markets like Christchurch provide strong value below replacement cost.
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Political risk is rising for residential, not commercial.
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Offshore demand is strengthening New Zealand’s commercial fundamentals.
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Yield compression is likely as rates continue to fall – timing matters.
Next Steps
Ready to explore commercial property with expert support? Connect with the Rethink Investing team to access off-market deals and tailored commercial acquisition advice.
Need lending support for your next residential or commercial purchase? The Lighthouse mortgage team can help you structure the right loan and get your finance approved.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
