The decline in the value of prime Irish retail properties slowed in the first quarter of this year but falls are expected to continue until early 2022.
According to the latest MSCI/SCSI index, the authoritative monitor of Irish commercial property, capital values across the board declined by a further 0.7pc in the first quarter bringing the fall in overall values to 6.1pc over 12 months.
Goodbody real estate analyst Colm Lauder said he expects further rental declines which could keep capital values in negative territory for 2021. Despite the fall in values, a positive income return of 1.3pc kept total returns positive at 0.6pc.
Retail continues to fare worst as capital values fell by a further 3.2pc on Grafton Street in the first quarter, by 4.7pc on Henry Street and by 2pc for shopping centres.
Consequently Grafton Street values have fallen 26pc since Covid struck while Henry Street values fell an even sharper 30.3pc over the 12 months.
Shopping centres, due to their grocery, suburban locations, parking and other advantages, fared better with an average 18.6pc fall over 12 months.
Mr Lauder says he expects declines to continue in retail throughout 2021 and into early 2022 “given that we do not consider the correction in market rents to be sufficient at this stage".
Dublin offices posted a modest decline in capital values in quarter one with city centre offices down 0.7pc and 2.8pc over 12 months. Dublin suburban offices declined by 2.4pc over the quarter and 8.3pc during the year.
Meanwhile, provincial offices were unchanged during the quarter and down 4.8pc over 12 months.
Mr Lauder attributes this to low levels of supply and strong tenants such as Government and overseas tenants.
“Despite the uncertainty surrounding the future of the office more generally, it may be surprising to note that Dublin office market rents are down only 1pc since the start of the pandemic,” he adds.
In line with European markets, Dublin industrials continued to outperform as demand for logistics space pushed up rents and international investor demand drove down yields.
Values for North Dublin industrial sites, benefitting from airport and port access, grew 4pc in the first quarter and by 8.4pc over the 12 month period.