Tuesday 21 November 2017

Dublin office yields continue to fall

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Canada House
Peter Flanagan

Peter Flanagan

The profitability of Dublin office blocks has halved in the last three years, but still remains higher than the Celtic Tiger years.

According to a new report from property firm Savills, the "yield" on office blocks in central Dublin has falled to 4.3pc from 8.5pc since 2012. That is still about 55bps higher than 2007.

The yield is essentially a measure of how much money an investor will make on a property per year after they have bought it. A lower percentage means the property will make less money in the long term, although it may still be profitable.

According to the Savills report, Dublin yields are now in line with the likes of Cologne and Berlin, but are far higher than the most expensive cities in Europe such as London or Paris.

Savills Ireland head of research John McCartney commented: "Arguably yields went too low in the last cycle, reflecting the credit fuelled property bubble of the time.

"In saying that, yields in the current cycle are likely to get down to at least those levels given the rebasing of benchmark bond rates to a much lower level in recent years," he added.

Irish Independent

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