What kind of property is best to invest in? Top choices for 2025
Property Investment Yield Calculator
Calculate Your Property Yield
Estimate your net return based on New Zealand market data from the article
Estimated Net Yield
This is based on current NZ market data from the article.
Article Reference: For industrial properties, 8.1% is a benchmark in Auckland (e.g., $22,000/month for $3.2M warehouse). Medical properties yield around 6.5-7.5%. Retail properties in good locations yield 7.2%.
If you’re asking what kind of property is best to invest in, you’re not alone. Every year, thousands of people in New Zealand look at property as a way to build wealth - but not all properties are created equal. In 2025, the market has shifted. Interest rates are stabilizing, tenant demand is changing, and zoning laws are tightening in cities like Auckland and Wellington. The answer isn’t just ‘houses’ or ‘apartments’ anymore. It’s about matching the right property type to your goals, risk tolerance, and local demand.
Industrial warehouses are outperforming everything else
Right now, the highest returning commercial property in New Zealand isn’t an office tower or a retail strip. It’s a modern industrial warehouse. These are buildings with high ceilings, loading docks, and easy highway access - often located near ports or major freight corridors. In Auckland, a 2,000-square-metre warehouse in Manukau rented for $45 per square metre annually in 2023. By late 2025, that same space is hitting $68. Why? E-commerce is still growing. Companies like Amazon, The Warehouse, and local logistics firms need space to store and ship goods faster than ever.
These properties aren’t flashy, but they’re reliable. Tenants sign 5- to 10-year leases. Vacancy rates in Auckland’s industrial zones are under 2%. That’s lower than any residential rental market. And because these buildings are built to strict standards, maintenance costs are low. One investor in Wiri bought a 2010-built warehouse for $3.2 million. After repairs, he’s pulling in $22,000 a month in rent. His net yield? 8.1% after rates and insurance.
Medical and health-focused properties are quietly booming
Think about how often you visit a doctor, physiotherapist, or dentist. Now imagine owning the building where those services happen. Medical clinics, dental practices, and private aged care facilities are in high demand. Why? They’re essential services. People don’t stop needing them during recessions. And unlike retail, they don’t rely on foot traffic - they rely on referrals and repeat patients.
Properties zoned for medical use are hard to find. In Auckland, a single-story clinic building in Remuera with 3 consultation rooms and a small waiting area sold for $2.1 million in March 2025. The tenant, a group of four GPs, signed a 7-year lease with 3% annual rent increases. The investor didn’t have to do any renovations. The previous owner had already upgraded the plumbing and electrical systems to meet health regulations. That’s the sweet spot: a building that’s turnkey, regulated, and locked in.
Office space? Only if it’s flexible
Office investment is risky - but not dead. The old model of renting out 100-square-metre units to law firms or accounting firms is fading. Companies are downsizing. Hybrid work isn’t going away. But here’s the twist: flexible office spaces are growing. Co-working hubs like WeWork and local operators like The Office Group are leasing entire floors in central buildings and breaking them into smaller, shared workspaces.
If you’re considering office space, look for buildings with high ceilings, good natural light, and central locations - but only if you can lease to a flexible operator. Don’t sign a single tenant for 5 years unless they’re a bank or government agency. A 1,200-square-metre office in downtown Auckland leased to a co-working provider in 2024 now earns $48,000/month. The same space rented directly to a single company would’ve earned $32,000 - and left you with a 6-month vacancy when they left.
Retirement villages are a long-term play
By 2030, nearly 25% of New Zealand’s population will be over 65. That’s not a trend - it’s a demographic earthquake. Retirement villages are one of the few commercial property types with guaranteed long-term demand. These aren’t just nursing homes. They’re full-service communities with cafes, gyms, hair salons, and medical support on-site.
The catch? You can’t buy a single unit. Retirement villages are built as strata-titled complexes. You invest by buying into the land and infrastructure, then leasing units to residents. A 30-unit village in Hamilton sold for $28 million in October 2025. The operator charges residents $1,800-$3,200 per month for accommodation, plus $500 for services. The investor’s net return? Around 6.5% annually. But here’s the real advantage: residents pay upfront fees of $300,000-$600,000 each. That means the operator has cash on hand for maintenance and upgrades - and you don’t.
Don’t chase retail - unless you know the tenant
Shopping centres and standalone retail shops look tempting. But in 2025, retail is a minefield. Big chains like The Warehouse and Countdown are closing smaller stores. Online sales keep rising. Even cafes and gyms are struggling with rising rents and labour costs.
If you still want retail, stick to two types: essential services and convenience spots. A pharmacy in a suburban strip mall. A liquor store next to a supermarket. A 24-hour convenience store with a petrol pump. These don’t need trendy locations. They just need visibility and parking. In Manurewa, a 150-square-metre pharmacy with a small car park sold for $1.9 million in July 2025. The tenant, a national chain, signed a 10-year lease with CPI-linked rent increases. The investor’s yield: 7.2% - and no worries about vacancies.
What to avoid: residential rentals and raw land
Many people think buying a house to rent out is the safest investment. In 2025, that’s a myth. Interest rates are still above 6%. Council regulations on rental properties are stricter than ever. You can’t raise rent more than 10% per year without a hearing. And tenant protections mean evictions take months - even for non-payment.
Raw land? Even riskier. Zoning changes can lock you out for years. A 2-hectare plot in Papakura zoned for residential use in 2020 is still stuck in the consent process. The owner paid $1.4 million. He’s now paying $18,000 a year in rates and has zero income. Meanwhile, a nearby warehouse bought for $2.1 million is earning $120,000 a year.
How to pick the right one for you
There’s no single ‘best’ property. It depends on your goals:
- Want steady cash flow? Go for industrial or medical. These have long leases and low turnover.
- Want capital growth over 10+ years? Retirement villages and well-located medical buildings are your best bet.
- Want to avoid management headaches? Industrial and medical tenants rarely cause issues. Retail and residential do.
- Have limited capital? Look for smaller medical clinics under $2 million. They’re easier to finance and manage.
Always check the zoning. A building that looks perfect might be zoned for ‘light industrial’ - which means you can’t turn it into a clinic. Talk to a commercial property lawyer before you sign anything. And never buy based on a broker’s promise of ‘guaranteed returns.’ If it sounds too good to be true, it is.
Final tip: Location still matters - but differently
Years ago, ‘prime location’ meant the CBD. Now, it means access to highways, ports, and population growth corridors. In Auckland, the best commercial properties aren’t in Ponsonby or Freemans Bay. They’re in Manukau, Wiri, and Botany. These areas are growing fast. New housing developments mean more workers. More workers mean more demand for warehouses, clinics, and delivery hubs.
Don’t just look at the building. Look at the road outside. Is there heavy truck traffic? Are there new housing estates being built nearby? Is the nearest train station within walking distance? These details matter more than a fancy facade.
Is commercial property better than residential for investment in 2025?
Yes, for most investors. Commercial properties typically have longer leases (5-10 years), lower vacancy rates, and tenants who pay for maintenance and rates. Residential rentals are more regulated, harder to raise rent on, and come with higher turnover. In 2025, commercial yields average 6-9%, while residential rentals hover around 3-5% after costs.
Can I get a loan for commercial property in New Zealand?
Yes, but it’s harder than for residential. Banks require a 30-40% deposit for commercial loans. They also look at your business income, not just your salary. You’ll need a solid business plan and financial statements. Some lenders offer 10-year fixed rates, which helps lock in payments. Specialist commercial lenders like Kiwibank and BNZ have dedicated teams for this.
What’s the minimum budget to start investing in commercial property?
You can start with $1.2 million for a small medical clinic or a 300-square-metre warehouse in a growing suburb. Anything under $1 million usually means buying into a shared property or a fractional ownership scheme - which comes with more restrictions. Avoid ‘cheap’ properties unless they’re in high-demand zones. A $800,000 building in a declining area could cost you more in repairs than it earns in rent.
Do I need a property manager for commercial investment?
Not always. Many commercial tenants handle their own maintenance and insurance. But you still need a commercial property manager to handle lease renewals, rent reviews, and tenant disputes. A good manager costs 3-5% of gross rent. It’s worth it - especially if you’re not local or don’t have legal experience.
Are there tax benefits to commercial property investment?
Yes. You can claim depreciation on building structures (up to 2% per year), interest on loans, insurance, and property management fees. You can’t claim depreciation on land. If you sell the property after owning it for more than two years, you generally won’t pay capital gains tax - unless it was bought with the intent to resell. Always talk to an accountant who understands commercial property rules.
Next steps if you’re serious
Start by identifying your goal: income, growth, or both. Then, pick one property type - don’t try to do everything at once. Visit at least three active commercial listings in your target area. Talk to the current tenants if possible. Ask about lease terms, rent increases, and any hidden costs. Check the council’s zoning map online. And never rush a purchase. The best deals don’t disappear overnight - they wait for the right buyer.
