Ireland plunges down the rankings for rents
Published 14/05/2013 | 05:00
An unprecedented drop in rents has seen Ireland plunge to 40th in the rankings of the most expensive markets for retailers to lease space.
Dublin was the 15th most expensive place in the world to rent retail space at the height of the boom but is now the 40th, according to a new survey by CBRE.
"The report highlights the improvement in competitiveness since the peak of the market. Open market rents are down more than 50pc from 2007 which is a real positive for Ireland and will be instrumental in attracting new overseas retailers," said Michael Harrington of CBRE in Dublin.
Falling property prices mean that even with lower rents the yield for new property investors is improving, according to the report.
Retail yields improved by around 0.25pc this year to about 5.75pc. Prime yields on shopping centres are currently in the order of 7.75pc, according to the data.
The main beneficiaries of falling rents are tenants signing new leases; however, a spate of high-profile examinerships of retailers including HMV, B&Q and Pamela Scott has seen retail chains secure big rent reductions as part of their court-approved rescues.
Outside of examinership, retailers are also winning rent reductions from the National Asset Management Agency (NAMA) in cases where the state agency is either their landlord or lender to a landlord in shopping centres and city centre premises.
Property sources say NAMA is more likely than other property players to cut rents, though it typically reduces rents on a temporary basis without giving up its legal right to benefit from boom-era leases in future.
CBRE said 12 retail investment transactions of more than €1m in value have been signed in the past six months as well as a number of smaller deals.