Commercial yield gap widens over bonds

Tue, 30 Jun 2020

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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