Dublin soars to top of office investment league
Dublin offices are the top performing investment in European property markets – ahead of London's West End.
These are among the findings in a report published by IPD, the investment property databank. After achieving an investment return of 5.2pc in 2012, which is more than double the European average of 2.5pc, the Dublin office investment market went on in the first quarter of this year to achieve a 2.8pc return for the quarter.
This is partly due to an annual high-income return of 10.5pc and it is one of the key factors attracting overseas investors to Dublin offices.
In 2012, investors snapped up €700m of Dublin offices. Other factors attracting investors include the stamp duty cut from 6pc to 2pc and the capital gains tax incentive for properties bought this year and held for seven years.
On a year-on-year basis, Dublin offices have returned 7.2pc to the end of Q1 2013, driven by an income return of 10.5pc and offset by capital value falls of 3pc over the year.
"The dramatic level of income return in excess of 10pc year on year, is the standout factor for the Dublin office market, offering a significant boon for investors," the report says.
Colm Lauder, senior research analyst of IPD, added: "The last 12 months have witnessed a key turnaround in the performance of Dublin offices.
"Like the recovery in the UK, where it was London that led the way, it appears that Dublin is following this trend."
The equivalent yield for Dublin offices has grown from a European low of 4.2pc when the Irish market peaked in 2007, to 8.9pc at the end of Q1 2013.
"High entry yields like those in Dublin will be attractive to investors eyeing up the Irish market, when compared to UK and European alternative offerings," the report adds.
Q1 2013 also saw the return of Dublin's rental value growth, with office rents growing by 0.3pc quarter on quarter as occupier sentiment in key areas showed signs of improvement as supply squeeze hit central locations.