There has never been a tougher time for commentators to predict where the commercial property markets are headed.
In over 40 years in the business, I have never seen such a complex mixture of extraordinary factors combining to influence confidence, activity and, potentially, values.
We have a very strong economy, full employment and extremely low interest rates; a combination that should fuel investment and expansion.
Yet, interest rates will jump by approximately 1.5 percentage points by year end, we have high inflation, the World Bank is slashing global growth forecasts, we are emerging from a pandemic and we have war in Europe.
Weighing up these risks is difficult but this is what investors, developers and property occupiers must do now.
Is it a time to postpone expansion plans and see what happens?
Or are the fundamentals of the market strong enough to justify pushing ahead with investment and capitalising on the opportunities that arise when others opt for safety?
Economists are having a field day trying to analyse all this, but I sometimes think that a ‘feel’ for the market can be lost amongst all of the data.
Like most, I certainly didn’t foresee the crash of 2008 when we thought that the banking industry knew what it was doing – but I’ve been on a good run since then.
Amid a tide of doom and gloom, I stuck my neck out in this column from the outset of the pandemic by predicting that the economy would reignite once restrictions were lifted with a wave of euphoric consumption.
In hindsight, it’s extraordinary that bodies like airport authorities and their advisers got it so wrong.
And it’s this same sense of an artificially imposed interference in the markets that makes me believe the future is brighter than some are predicting.
The main reason inflation is high is because of the unleashing of pent-up demand from the pandemic and disruption of supply lines. Just as that factor was stabilising, the war in Ukraine has triggered rampant inflation, particularly in energy and construction costs.
But these factors are probably short term too. Covid may be with us forever, but surely can be managed.
The war in Ukraine could go on for years but there is also likely to be a peace agreement this year, or even regime change in Russia.
As soon as either happens, markets will soar, the energy crisis will resolve itself as supply comes back, inflation and interest rates reduce again and property values will rise.
There is still a weight of capital chasing long-term income in Ireland and crucially, unlike previous downturns, there is a shortage of supply of residential, logistics, and even office property.
The biggest conundrum will be the reaction of the markets to the higher cost of borrowing, which feeds into yields and values. Speaking with agents this week there is no sign of any reduction in enquiries, viewings and offers.
Perceived risk creates opportunity too and I am looking forward to moderating a panel debate on ‘Opportunities in a world of risk’ as part of the Society of Industrial and Office Realtors (SIOR) International European Conference from July 13-15.
The SIOR is bringing over 350 delegates to Dublin and my panel will include economist David McWilliams, Kevin Nowlan, who last week oversaw the sale of Hibernia Reit for €1.1bn, and Jackie Wild, the CEO of TSL who design and build logistics buildings in Ireland.
For booking information visit sioreurope.com