Wednesday 17 January 2018

Investment returns up 2.8pc in Q2

AN increase of 2.8pc in the investment returns from Irish commercial property was achieved in the second quarter of this year. This makes for the seventh consecutive quarter of positive returns, according to the Jones Lang LaSalle Irish Property Index.

The index also reported its first increase in overall capital values for the first time in five quarters, with a 0.4pc increase. This increase was driven by growth in Office Capital Values, which increased by 2.2pc in the quarter.

However, capital values for retail and industrial properties continued to fall and were down 1.7pc and 0.5pc, respectively.

In the last 12 months, retail capital values have decreased by 9.8pc, which shows the continued pressures the sector is facing.

Overall rental values increased by 0.6pc in the quarter, highlighting the increasing stability in commercial occupier markets.

This is only the second quarter since Q2 2008 that rental values have increased overall.

In particular, there is evidence of stabilisations in office and industrial occupier markets, with market rental growth for both sectors recorded this quarter.

Hannah Dwyer, head of research, said that continued stability in the office sector had positively impacted overall capital and rental values this quarter.

Office occupier and investment markets have performed steadily over the last 12 months, with evidence of rental growth in the last two quarters and the first signs of value increases this quarter for prime product.

Ms Dwyer added that the index trends confirmed the nascent recovery of the market.

However, there are inconsistencies across the market as reflected in the contrast between office capital and rental values, which increased by 2.2pc and 1.2pc in the year, compared to decreases of 1.7pc and 0.1pc, respectively, for the retail sector across the same indicators.

"The retail market continues to be faced with challenges such as low rents, store vacancies and underlining weak consumer sentiment," she said.

Irish Independent

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