Annual Market Report Snapshot – May 2024

Since our last report in May 2023, the managed apartment market has remained fairly stable, albeit with a relatively low number of apartment sales transacting.

This dynamic was in large part to lower levels of listings available for sale.  But this was accompanied by relatively low levels of buyer enquiry, especially in the latter half of 2023 as high interest rates, cost of living crisis and the pending election dominated the news.  We also didn’t see the post-election pick up in activity that many pundits were predicting.

While the strength of the general real estate market in Queenstown has been underpinned by the higher end residential sector, the Managed Apartment sector has definitely held its own and, while prices did not appreciate significantly over 2023, they remained stable in light of very strong income performance, combined with a lack of quality stock available in the market.

We also saw good levels of demand for premium apartments with some good price appreciation and we do believe quality properties, and new properties in particular, will continue to be in hot demand and command premium prices moving forward.

We are also seeing a revival of interest from sectors of the overseas investment market, particularly the US and China as visitor numbers from those markets continue to rebound post-Covid.

Some of the other trends identified in our last report have continued to be evident:

• Premium / 5-Star properties continue to be the best performers and in the hottest demand
• Buyers are less reliant on finance
• Income continues to be a strong influence on price, but less so at the premium end of the market
• Interest from Australian buyers is still there – but definitely not in the numbers we were seeing last year
• Income levels have continued to recover, especially over the past few months with income surpassing 2019 levels in many complexes
• Supply of listings in the market remains low – especially at the premium end of the market

2023 also saw extreme increases in build costs for new developments and the consequent pricing needed to make the projects viable.  This saw off-plan developments coming to market at prices 30-100% higher than that of high quality existing properties (circa $20,000 to $22,000 per m2).  At this point the value perceptions of the market have not lifted to this level and as a consequence a number of projects were either cancelled or mothballed as they simply couldn’t achieve the level of pre-sales required.

With the push-back we have seen in the market at anything close to or over $20,000 per m2, these sales are a remarkable achievement and we will continue to watch with interest as the campaign unfolds.

As we continue to reinforce to all our clients, Queenstown is not just “one market” and different sectors have very different economic and environmental drivers.

At a general level, the local economy has been buoyed by a resurgent visitor market and the average house price in the district was up 3% in December 2023 compared to a year earlier.  This is higher than the national average which was down 2.2% for the same period.

For the managed apartment and lifestyle investment sector, we saw pricing for like apartments in the lower range sector of the market circa $650,000 to $1,000,000 show some good capital appreciation over the past 12 months, but portions of this sector also took a pronounced dip in value in 2021 post-Covid.  So this is essentially a recovery back to pre-Covid levels.

At the mid-range level circa $1,000,000 to $1,750,000 we did not see the same drop in values in 2021 and year on year growth was between 10% and 20% depending on the property.  i.e – Smaller, higher quality apartments in this price bracket showed stronger appreciation than larger properties of a lesser standard.

At the higher end of the managed apartment market, $1,750,000 plus, we saw a higher capital appreciation in 2022 than we did in 2023, but the caveat to this is that there were very few sales in this price bracket in 2023.

It is also important to note that those properties on fixed incomes / lease agreements such as Ramada Central and Ramada Remarkables Park, have shown very little, if any growth over the past 2 years.

So all in all, 2023 was more of a year of consolidation in terms of values for managed apartments, with income returning to pre-pandemic levels in recent months, and in some cases beyond what owners were receiving in 2019 for certain months of the year.

Click Here to download Full 2024 Annual Market Report