Values for Dublin retail and office properties slipped in the second quarter of the year but industrial and logistics properties continued to power ahead.
These are the latest findings from the MSCI/SCSI Ireland Quarterly Property Index, the authoritative gauge of the investment performance of Irish commercial properties.
Grafton Street shops, a key barometer of the Irish property market, posted a further 0.9pc decline in Q2 of 2022.
Colm Lauder of Goodbody stockbrokers says this brings cumulative declines on the street to 38pc since pre-Covid levels. “Henry Street shops were weaker again, down 1.5pc last quarter and values are now down 46pc since 2019,” he adds.
City centre Dublin offices were effectively flat in the quarter, down 0.1pc, although Dublin 2 offices were up 0.3pc.
Over the 12 months, central Dublin office values have slipped 0.8pc and rents by 0.6pc.
Nevertheless, Edward McAuley, director of practice and policy at the Society of Chartered Surveyors Ireland, said Irish property has maintained a positive income return.
Mr Lauder says that over the 12-months, Irish investment property has delivered investors an average ungeared total return of 5.2pc. This contrasts with a total return of 23.7pc in the UK over the same period.
The MSCI/SCSI figures also include the performance of alternative types of property and including residential, healthcare and others and this sector saw values rise 3.3pc.
Irish commercial property overall outperformed equities and bonds which suffered severe falls. MSCI’s equity index fell 26.4pc in the year to June 2022 while its bonds benchmark scored a 12.4pc negative return. In contrast, Irish commercial property returned 5.2pc over the same period.
The key factor in the Irish property performance was industrial and logistics with a 5.1pc return for the quarter to June 2022 and 5.2pc for the 12 months.
The overall Irish performance is underpinned by the record level of investor activity during the first half of the year when €3.2bn worth of Irish property changed hands, according to CBRE. While offices accounted for 51pc of Q2 investment and 41pc of the first half investment, this was largely driven by the Hibernia Reit deal. When that deal is excluded, the residential sector was the most invested accounting for 35pc of the Q2 deals and 41pc of the first-half deals.
Colin Richardson of CBRE says momentum in volumes is set to continue into the second half of the year “with notable large scale office and residential trades due to complete”.
“The strength of the occupier markets across the industrial sector and at the prime end of the office sector remains highly robust with demand/supply imbalances evident and rental growth in both sectors. While both the Dublin residential market and the Irish healthcare sector remain fundamentally undersupplied These dynamics are encouraging continued institutional interest in investment and funding opportunities in these sectors.”