20 Jun 2025
In our first regular quarterly update, we reflect on the key themes shaping investor sentiment and commercial property performance as the market continues to evolve. While there are signs of stability, global volatility remains a defining feature of the current environment.
Geopolitical tensions, policy shifts, and fluctuating capital markets are influencing investor behaviour in real time. Against this backdrop, our focus at PMG is clear: to help investors navigate with confidence, stay focused on long-term value, and position our funds for long-term growth.
Foundations strengthening
After a challenging period defined by rising interest rates and softer valuations, there are signs that foundations are beginning to stabilise. The Reserve Bank’s rate cuts have eased borrowing costs across the board, offering relief for debt-funded assets and helping restore balance to investment strategies. However, inflation remains a live risk. Geopolitical tensions — including conflict escalation and energy market disruption — are fuelling and uncertainty around inflation, which could slow further rate reductions.
In parallel, the New Zealand Government’s 2025 Budget introduced a Investment Boost tax incentive, effectively enabling a 20% tax deduction on eligible asset costs, on top of depreciation. This move is designed to encourage long-term capital investment and may provide tailwinds for asset values in the commercial property sector, particularly for well-maintained buildings with sustainable infrastructure and strong tenant profiles.
PMG’s own retail funds have demonstrated resilience, with like-for-like valuations increasing between 1.9% and 2.4% over the 12 months to March 2025. Consistent rental income and strategic asset management continue to underpin our portfolio performance.
Global turbulence
Volatility remains a global theme. From geopolitical conflicts and supply chain uncertainty to shifting central bank policies in major markets, investors are navigating complex terrain.These macro disruptions can have real-world effects — not only on capital flows, but also on inflation expectations, currency strength, and trade exposure.
As uncertainty persists offshore, New Zealand’s relative stability and income-generating real assets remain attractive to both local and international investors seeking security and diversification. There has also been a growing wave of international interest in New Zealand investment, driven by recent policy reforms and demand for stable, income-generating assets.
This momentum is visible in landmark deals such as the NZ$161 million sale of Manukau Supa Centa (the largest retail transaction in NZ since 2007) which attracted over a dozen bids from across NZ, Australia and Asia.
At PMG, we’re seeing similar activity firsthand, with a marked rise in offshore interest this quarter, particularly in large-format retail opportunities where scale, tenant quality, and long-term income remain key drawcards. These signals point to growing confidence in New Zealand’s commercial real estate market — and a timely opportunity for global investors to act.
Fuel in the tank
Policy and monetary shifts have laid the groundwork for the next stage of market recovery — but discipline remains essential. PMG continues to focus on three core drivers of long-term value:
We also remain focused on strengthening our balance sheet. Hedging, long-term funding arrangements, and proactive refinancing help ensure we’re well positioned to respond to both risk and opportunity, regardless of how macro conditions evolve from here.
Disclaimer: The information in this article is of a general nature and was current as at June 2025. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013 and does not take your individual circumstances and financial situation into account. As with any investment, commercial property carries risks, including the risk of loss of capital. Past performance is not a guarantee of future results. PMG does not provide financial advice about whether an investment in one of its funds is right for you. Please seek advice from a licensed financial advice provider before making any investment decisions. PMG’s secondary market matching service operates on a queue system, and there is a fee. The time it takes to move shares or units can vary depending on the number of sellers in the queue and the level of demand.
