Monday 27 May 2019

Positive outlook for rents and prices but one in four says market has peaked

However a quarter of respondents see peak

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Donal Buckley

Donal Buckley

The outlook for both rents and capital values in Dublin's commercial property market continues to be positive, according to a survey published by the Royal Institute of Chartered Surveyors (RICS).

Although the majority of survey participants continue to sense the overall Irish market is in some stage of an upturn, 28pc feel it has reached a peak.

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For Ireland as a whole, 39pc view the market as expensive, 48pc say it is fair value and 13pc consider it cheap.

For Dublin, 45pc of respondents feel the market is at its peak, 20pc feel it is at a downturn and 35pc says it is still in the upturn stage.

Overall capital value projections at the quarter one stage of the year are slightly more modest compared with the previous quarter. Even so, values are still seen as rising to a greater or lesser degree in all but the secondary retail segment, where projections are flat to slightly negative.

In terms of investment demand, enquiries from both domestic and overseas buyers continue to rise modestly for office and industrial assets.

For retail, overall enquires are broadly flat in the first quarter of this year, although a marginally negative trend is cited when it comes to international demand.

Conducted in conjunction with the Society of Chartered Surveyors Ireland (SCSI), the Q1 2019 Ireland Commercial Property Monitor suggests the market maintains slightly positive momentum, although this marks a noticeable deceleration when compared to recent years.

The investment sentiment index shows a plus-13 rating for Ireland. While that is one of the more modest figures posted since 2013, it is the twelfth-highest of the European countries surveyed. It is fifteenth-highest of the global counties surveyed and ahead of the US and UK but behind Germany and France.

The occupier sentiment index, at plus 16, was also fifteenth-highest in the global context and the eleventh-highest of EU countries.

Conditions continue to diverge at the sector level, with occupier demand still rising firmly for office and industrial space, while retail appears to be stagnating with no growth reported in the past three quarters. Alongside this, respondents note that availability is now on the rise at both the headline level and within the office and retail segments.

Twelve-month rental expectations see respondents still anticipating that prime office and industrial sectors will lead the way, with growth of about 4pc. The rental outlook remains flat to marginally negative for secondary retail.

In terms of investment demand, enquiries from both domestic and overseas buyers continue to rise modestly for office and industrial assets.

For retail, overall enquires were broadly flat in the first three months of the year, although international demand is marginally negative.

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