Commercial yield gap widens over bonds

Commercial yield gap widens over bonds
Brent Melville
The return on commercial property relative to New Zealand government bonds has never been higher on the back of record-low interest rates, the result of a decade of loose monetary policy and recent emergency rate reductions. Auckland’s office yield and its spread is the highest in the Asia Pacific, with a 5.8 percent yield for grade-A offices returning a full 500 basis points more than the 0.8 percent yield on the NZ 10-year government bond rate. The distance between yields on bonds and industrial assets, at a spread of 480 basis points,...

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