Otago is among the top three regions in the country delivering the highest gross return on investment (ROI) to investors from owning residential rentals.

The national average for rental property returns for the month was 4.1%.

Gisborne returned an average 5.78% on residential rental property investment in January, based on an average asking price of $258,515.

Otago returned 5.54%, and Manawatu-Wanganui returned 5.12%, according to data released by the Real Estate Institute of New Zealand's sales web site yesterday, Realestate.co.nz.

Anecdotally, since late last year, Dunedin's campus area has been the target of an increasing number of out-of-town investors, whose ROI in Auckland and elsewhere diminished as house prices leapt to record highs.

Nidd Realty director Liz Nidd said inquiries from Auckland investors were on the increase, and many moving to Dunedin were themselves renting before buying, given local rentals were relatively inexpensive.

In Otago's case, based on an average asking price last month of $310,000, a property would return a gross yield of about $17,000 for the year, or $327 a week.

Mrs Nidd said the data was "positive'' for Dunedin, given investors were getting more for their investment, plus a better return on rentals.

The ROI data was before mortgage repayments and costs of maintenance and property management were applied.

With a ROI of of around 3.5%, Central Otago Lakes was at the bottom-end of the scale of 19 regions, followed by Auckland; both areas having the highest house prices in the country which dampens returns.

Realestate.co.nz chief executive Brendon Skipper said of most interest for potential investors were the significant rental opportunities in quite diverse parts of the country, in particular Gisborne, Otago, and Manawatu-Wanganui.

"There are clearly some very attractive rental property investment opportunities in some parts of New Zealand that don't ordinarily attract intense national media interest when it comes to property,'' he said in a statement yesterday.

The data excludes Coromandel, which is skewed by short-term holiday rental returns that push its ROI out to 10%.

The data also excludes Book-A-Bach and holiday rentals, instead assuming 100% rental occupancy during the year.

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