You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
Demand remains high in most sectors of Dunedin's property market, from residential and rental housing to commercial properties and the student accommodation sector.
Economically, Dunedin is in a good position, several recent reports outlining strong growth opportunities in the short to medium term.
The Colliers report said there was plenty of "positive sentiment" derived from economic growth, business confidence, tourism growth and current low interest rates.
The $1.4billion new Dunedin Hospital build, plus University of Otago projects were among the strongest contributors to the positive sentiment.
Growth in Dunedin's property market in general was expected to continue over the short to medium term, but at a more moderate pace.
Colliers said following strong growth in Dunedin's residential property market through 2017 and last year, the outlook was more subdued for this year and next.
"Although good growth was continuing during the first half of 2019, sales volumes are reducing, mainly due to the lack of available stock and reduced buyer numbers," the report said.
Colliers' noted the Dunedin market was no longer perceived as affordable, which also contributed to reduced sales volumes, and could affect value growth during the rest of the year.
Residential median prices for all dwellings rose from $325,000 in the year to March 2017 to $411,000 in the year to March this year, while $1million sales rose from 29 to 41 over the same period.
"Dunedin's resurgence as an attractive place to live and work is driving ongoing demand for residential property."
However, there were reduced levels of housing stock, sales numbers were down and some of the ageing stock required upgrading.
"Particularly rental homes which may not meet new standards."
Colliers said the rental market was "still in crisis" with the numbers of stock reduced and already high rents continuing to rise.
"Anecdotal evidence points to perhaps two-thirds of the rental homes placed on the market in the past two years being sold to owner-occupiers."
This was forcing renters out of several suburbs and towards the central city and campus areas, which were subsequently also now experiencing high demand.
Median weekly rents across Maori Hill and the university were $495 for a three-bedroom home, compared with $500 in central Christchurch and $605 in Auckland's central west.
While university student numbers tracked downward during the five years to 2015, affecting the city's student accommodation sector, this reversed in 2016 and numbers continued rising this year, boosted by a 4.6% increase in international enrolments.
Last year, weekly per-room rent for a near-new, furnished room with en suite was $210, while shared flats ranged from $145 to $155 per room.
"The student investment market remaining largely insulated from property market movements across Dunedin and nationwide, with investors attracted by the income stream and underlying stability of the university and polytechnic as ongoing sources of tenants."
The median rental yield in the campus area was 6.7% during the first quarter of this year, compared with 6.6% last year.
"While [rental] investment yields have tightened, and will likely continue to do so, the city remains a hot spot for out-of-town property buyers seeking better returns than those commonly available in the three main centres."
There had been a big increase in sales of properties with self-contained studios, suggesting a shift in buyer preference towards higher-returning multi-studio properties.
"Tenants are placing greater emphasis on quality of accommodation rather than just location."
In mid-2018 a North East Valley property with a mix of three bedrooms and 15 studios, some with shared bathrooms, sold for more than $2million, with the total weekly rent more than $4500 and a gross yield of 11.4%.
In Dunedin's commercial sector, office vacancy levels were declining further and there was pressure on rental growth increasing, with rent rises gathering momentum.
Colliers said office vacancy levels were down because several new leases were completed this year and last, absorbing a significant amount of vacant office space, particularly larger floor areas.
With the leasing of John Wickliffe House in the Exchange, 77 Vogel St and 276 Princes St, which combined amounted to about 5000sq m of space, Dunedin's vacancy rate had fallen to its lowest level in some time.
"Construction of some new office space is likely in the coming years as developers gained confidence to address the current supply and demand imbalance."
Landlords were increasingly opting to refurbish older office buildings, in response to increased tenant demand, the report said.
Around Dunedin industrial space remained "very scarce", with few options to either lease or buy.
"There's a lack of available development sites, with the situation unlikely to improve in the near future due to geographical constraints and shortage of freehold land.
Rents were increasing across the market in Dunedin in response to high demand and supply shortages.
Colliers said a move by Port Otago subsidiary Chalmers Properties to sell underlying freehold interests to existing long-term ground lessees would increase the desirability of those sites, as well as their value, if they were later put up for sale.
In the city's retail property market there was a widening gap between the prime and secondary retail property markets, with prime retail performing well but secondary property lagging as occupiers struggled in an increasingly competitive market.
Annual rents for prime properties were about $500-$1200 per sq m, while secondary space was in a range of $150-$450 per sq m.
A three-storey George St property with leases in place and a net yield of 5.7% sold last August for $2.53million.
Vacancy rates in the central retail blocks of George St, plus other prime retail areas, remained very low in the face of high tenant demand.
"Local businesses [are] becoming squeezed out of the prime George St market by national and international chains."
However, the food and beverage sector was on the rise, especially at the north end of George St, in the Octagon and around the warehouse precinct
While strong buyer demand for prime retail investments continued, landlords continued to hold on to strong-performing property assets.
"The lack of available centrally located freehold industrial and bulk retail sites is hindering development and entry to the market of some national and international brands," the report said.
Little real estate data is generated on Dunedin's apartment market, but Colliers said apartments were generally selling quickly and prices were increasing across the sector.
Apartment living was an attractive option as it offered good quality and value compared with lower-end suburban houses, the report said.
"Further demand is coming from retirees opting to downsize or acquire a central city base."
The outlook for further value growth was positive, especially for new, high-quality units, albeit there was a limited amount of construction of new apartments, but with some warehouse conversions under way.