Regional Profile: Dunedin
One of the emerging stars in NZ’s property market is Dunedin – which is being recognised as a region of growing potential. Dunedin’s population grew 2.7% in the year to March 2019, well ahead of the national average. Employment opportunities are on the rise in Dunedin, particularly with large service industries. Enrolments at the University of Otago are on the rise and the talent pool of graduates, which feeds a strong ‘start up’ eco system is also a key factor. Dunedin’s economy is also very sound having grown steadily since 2015. While construction is already one of the biggest contributors, this is only set to strengthen with the $1.4B build of the new Dunedin Hospital and the University of Otago’s biggest campus expansion.
Demand remains strong for all sectors of the property market – residential, commercial and student accommodation. While residential and student accommodation yields have tightened following sharp rental increases since 2015, the yields remain more attractive to investors than those in the other main centres. Dunedin’s capital growth rates are also some of the best in the country. The median sale price has increased 26% in the last 2 years.
Average property values (Source: CoreLogic)
The commercial sector is also performing well due to increased demand and limited supply. Dunedin is plagued with a lack of development land – due to geographical constraints and availability of freehold land. Industrial space is like ‘hens teeth’ to source on both the buying and leasing fronts. Vacancy levels of office building space has been on a progressive decline, now resulting in rental growth. Several large new leases have been signed over the last couple of years absorbing a big chunk of available space. The current tightness of supply and the low risk of a large amount of new supply coming on stream, remains good news for landlords holding commercial property in Dunedin.
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