24 Jul 2026
We entered 2026 expecting a year of momentum, and while that has broadly played out, it hasn’t been without disruption. The first half has been characterised by shifting signals - geopolitical tension, inflation prints, rate expectations and election-related uncertainty. In periods like this, it’s easy to get drawn into short-term reactions.
At PMG, our focus remains on actively managing our assets and funds, strengthening capability across the business, and making decisions that are designed to deliver over the long term rather than respond to near-term noise.
In this update, we outline how we’re seeing the macro environment as we move into the second half of the year, where our conviction is building, and what that means for how we position the portfolio.
Markets are currently pricing a high likelihood of a near-term rate move, while the RBNZ’s forward track suggests a gradual normalisation path over the coming years. Inflation is expected to lift in the short term before trending back toward the target range through 2027.
Domestically, Budget 2026 has been delivered and attention is starting to shift toward the election cycle. Policy direction, particularly around tax, will remain an active consideration for investors over the coming months.
Offshore, recent developments in the Middle East have eased some pressure on oil and shipping markets. While this is constructive at the margin, underlying tensions remain, and we’re treating recent progress as incremental rather than resolved.
Our conviction continues to strengthen in sectors where demand is less sensitive to economic cycles. This includes large-format retail, industrial, childcare, healthcare and well-located, high-quality office.
These are areas where tenant demand tends to be more resilient, and where we believe there is still capacity to grow exposure selectively.
Childcare is a good example. Over the past 12 months, PMG’s Direct Childcare Fund has continued to scale through the acquisition of purpose-built early childhood centres in established and growing catchments across New Zealand.
Healthcare is another area of focus. With the public system under increasing pressure - both from demand and infrastructure constraints - we see a growing role for high-quality private sector assets that meet our investment criteria.
Our approach to gearing remains deliberately conservative and is not driven by short-term movements in the OCR. We position our funds to perform across cycles, rather than relying on favourable rate conditions.
This discipline supports a broader structural theme underpinning commercial property. Construction costs have moved materially higher over recent years, and in many cases, replacement costs now exceed current asset values. That dynamic continues to limit new supply, while demand for well-located, high-quality assets persists.
We're also continuing to see renewed interest from offshore investors in New Zealand commercial property. The combination of relatively stable market settings, transparent regulation, and currency positioning continues to attract capital seeking consistent, income-based returns.
This adds a layer of support to local fundamentals and is factored into how we think about portfolio positioning.
The tail of this cycle will stay bumpy for a while yet. However, the strength of scale gives us room to use the skillset that matters most in conditions like these: active, hands-on management of quality assets, executed by a strategy built to deliver well for investors over the long term.
Disclaimer: The information in this blog is general and current as of July 2026. It is not intended as regulated financial advice under the Financial Markets Conduct Act 2013 and does not consider your specific circumstances. PMG does not provide financial advice. Please consult a licensed financial advisor before making investment decisions.
