Source: JLL Research 4Q24

This can be due to a combination of the following factors:

Figure 2 illustrates the relationship between capital value growth and yields across both countries, revealing several similarities:

• CBD offices are generally clustered in the middle of the chart, with moderate yields and growth rates.
  
  
• Retail properties show the strongest negative correlation (Pearson correlation coefficient -0.56 and Spearman Rank correlation coefficient of -0.50), followed by industrial and office properties.
  
  
• The small differences between Pearson and Spearman correlations for overall data (-0.32 vs. -0.27) indicate consistent relationships, whether viewed as linear or monotonic.

Looking ahead to 2025, New Zealand yields are projected to increase by an average of 125 bps across locations and property types. The combination of lower returns from fixed deposits and reduced financing costs is expected to boost transactional activity. While stagnant rental rates in 2024 constrained both capital and income returns, historical patterns suggest this pause often signals the beginning of a recovery phase. By 2026, we expect rising rents to once again drive the capital value growth.