Commercial rents among world's most expensive
COMMERCIAL rents in Ireland appear to be among the most over-valued in the world, to judge from calculations in the latest World Economic Outlook from the International Monetary Fund (IMF).
But different measures give different readings for Irish house prices, the IMF says. One finds that house prices are also the most over-valued, while others suggest prices have little further to fall. The IMF fears that worse is still to come in global commercial property markets and that this, along with house price declines, could produce a new banking crisis.
It expects the global economy to grow by 3.1pc next year, up from a July forecast of 2.5pc. The US economy will grow by 1.5pc, the euro area by 0.3pc and Britain by 0.9pc. China's economy will expand by 9pc, while India will grow 6.4pc.
Shrink
The Irish economy, however, will shrink by 2.5pc in 2010, following a 7.5pc fall this year. This will be the worst performance in the euro area, with only Spain, Luxembourg and Greece contracting -- by 0.7pc 0.2pc and 0.1pc respectively.
The IMF says house prices may have further to fall in most economies, with Ireland, Britain and Italy the most vulnerable on one analysis, which includes factors such as income growth, interest rates and construction costs. Other models show Ireland at around the EU average.
"The analysis most consistently points to further large declines (in house prices) for Denmark, Spain and the United Kingdom," the report says.
Dublin had the third highest increase in vacant office space in 2008 among 40 cities surveyed, and the third highest rents compared with historical averages.
- Brendan Keenan
Irish Independent
