New Zealand Economic Commentary – March 2026
New Zealand has experienced a tough few years economically, and it certainly felt in the first two months of this year that we were firmly on the road to recovery.
Since late February however, the world has been rocked by the current Middle East conflict. The resultant effect on global oil production, distribution and hence prices is a major cause for concern. Oil is trading at between $100 – $110 per barrel (at the time of writing), and the effects on inflation are already starting to flow through.
In some ways this feels like a case of déjà vu from 2025, when a soft recovery was derailed by the Tariff uncertainty in April. Inflation is firmly back in frame as the number one concern, with the resultant effects on interest rate policy still to be determined. Just how long the conflict lasts is the major point, and only then will there be some way to forecast where our economy will go.
In the meantime, the backward-looking information to hand shows many positives, with business confidence having lifted meaningfully, and GDP numbers showing growth is creeping back across the country, albeit slower than anticipated. The RBNZ has been clear that it does not see the need for near-term OCR hikes, however, with the Iranian conflict still raging there is no way to accurately forecast this at this point in time. The wholesale swap markets are forecasting much sharper increases to the OCR starting earlier than the RBNZ forecasts.
The residential property market remains a buyer’s market in most regions, characterised by good supply and cautious demand. However, modest price growth is forecast over the next 12–18 months as confidence improves.
Commercial Property – Foundations in Place
As Colliers noted in their February update, “we’ve laid the bricks for ’26” implying a stronger year ahead for commercial real estate. The standout sector continues to be industrial property, with large-format retail also performing well. The office sector has been under the most pressure, with a number of softer transactions in the market impacting office valuations negatively.
However, early signs of improvement are now emerging – largely within the “flight to quality” theme, as tenants prioritise high-performance buildings, sustainability credentials, and employee wellbeing, particularly as return-to-office trends become more evident.
In summary, while conditions are not yet strong, momentum is improving. Despite global uncertainty, New Zealand appears to be moving slowly but steadily into a period of measured recovery through 2026 – however this is highly dependent on events in the Middle East.
First Light Capital Portfolio News
Our wider portfolio continues to perform strongly with 100% occupancy across all syndicates and funds. One particularly positive result we have had to start the year being: Within the Quadrant Partnership syndicate, the two properties here continue to perform exceptionally well helped by proactive tenant participation.
At 8 Antares Place, we have extended tenure onsite and in return have completed a full LED lighting upgrade and also a complete HVAC replacement, these initiatives paving the way for a strong NABERS rating to be achieved.
At 98 Kerrs Road in Wiri, the tenant is completing some significant tenant led construction works to improve their operations. Working with the tenant closely, the landlord has upgraded the lights to LED’s throughout and completed a significant project enabling the addition of a full drive around ability and 13 additional car parks to help with onsite parking.
As a result of this we are thrilled to have agreed with our valued tenant to extend their tenure onsite for an additional 12 years with further renewals. We look forward to working with The Skills Organisation for many years to come. Whilst these outstanding results are specific to the Quadrant Partner investors, the team will continue to monitor all syndicates and funds for opportunities whereby value creation can be unlocked.
First Light Property Fund News – Lease extensions secured
Within our First Light Property Fund Limited (FLPFL), we are pleased to confirm several lease extensions have been secured well ahead of upcoming renewal dates.
At 233 Collingwood Street, Hamilton, NZI has committed to a further term, extending their occupation for at least five more years. PDP Limited has also agreed to renew for a further four years from December 2026, ensuring the property remains fully occupied for the foreseeable future.
At 2 Harris Road, we are equally pleased to confirm that AON Insurance has committed to an early renewal, reinforcing their long-term presence onsite. Notably, these were the first two properties within the portfolio to achieve strong NABERS ratings, underscoring the growing importance of sustainability in supporting tenant retention.
These outcomes extend the Fund’s weighted average lease term (WALT) and provide increased income certainty for investors.
Financial Year End (31 March) – PIE Tax Update
The end of the financial year, 31 March 2026, is upon us, so here’s how tax applies to your investment in First Light Capital’s PIE Funds.
- PIE tax is calculated on your allocated PIE taxable income (not your dividends) and deducted throughout the year, so tax is paid progressively as income is earned rather than as a year-end payment.
- We pay this tax to Inland Revenue using your Prescribed Investor Rate (PIR), so no further tax should be payable provided your PIR is correct. If your PIR is not correct, Inland Revenue may do a year-end PIE calculation to square up any under- or overpaid tax.
- At year end, a final reconciliation is completed to make sure the correct amount of tax has been applied. Your PIE tax certificate will be available on the investor portal by 15 May 2026, which aligns with Inland Revenue’s 15 May due date for PIE annual reporting.
- If your PIR needs updating, please let us know by 31 March 2026 at the latest. After that date, changes cannot be made for the year-end tax calculation, so it is important to confirm your PIR before then.
You can find more information about PIE tax and how to calculate your PIR on the IRD website.
First Light Property Fund Limited (FLPFL)
Targeting a total return of 8%*, inclusive of cash dividends and capital returns.
The current investment round for First Light Property Fund Limited (FLPFL) remains open to wholesale investors. With a diversified $80m+ portfolio, established national tenants, and a targeted return of 8%*, the Fund continues to generate strong interest. If you’ve been considering an allocation or would like to revisit the opportunity – we welcome a conversation.
Click below to register your interest, and our team will be in touch to discuss whether this opportunity is the right fit for you.
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