Boom-level rents won't be seen again here until 2020
IT will be 2020 before the commercial property market even gets close to the levels of the boom.
According to CBRE, the long-term projections for the Irish market show it will be the end of the decade before the sector moves back towards levels last seen in 2006.
Launching their outlook for 2014 this week, CBRE's Marie Hunt said that while the market was posting a strong recovery, the previous top of the market was a long way off.
By 2020, office rents in Dublin will be going for about €627 per square metre, forecast CBRE.
That compares to the €673 per square metre that was the going rate at the top of the bubble.
As a measure of how far the market fell, office rents plunged to as low as €296 a square metre during the crash and are have only just begun to recover.
Office rents hit €377 last year and expected to go higher by the end of 2014.
Those sorts of prices have attracted huge numbers of foreign investors looking for value in the property market here.
The retail market is in a similar situation.
By the middle of the last decade, rents in Grafton Street were among the highest in the world at €10,000 a square metre. They have since fallen 60pc, but are expected to recover to about €6,225 a pop within the next six years - still 38pc off the peak. For the investment market, yields plunged to about 4pc during the good times, and rose sharply after the market began to recover last year.
Now they are close to 6pc, and are likely to stay at or near this level for a number of years.
The projections that the market is unlikely to get back to boom levels will be seen as a blow to a commercial property market that has seen a surge in activity in the last 12 months. However some analysts welcomed the forecasts as an indication of a "normal" property market.
From an almost standing start, some €2bn worth of deals were done in 2013, and that level is expected to increase in 2014.
Investors from Ireland and overseas are moving heavily into commercial property and that has seen prices spike dramatically in recent months. US investor Kennedy Wilson, which has spent more than €300m in Ireland, is already sitting on notional profits worth millions after office prices increased sharply last year.
In the industrial market, prime rents have fallen from €129 per sq metre to about €60. They are set to return to about €109 over the next six years.
It is the same picture when it comes to yields.
Prime office yields were as low as 3.75pc at one point, but are seen staying almost flat at 5.75pc, while it is a similar story in retail.