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Retail property investment shows signs of turning corner

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While retail capital values decreased 3.2pc over the 12 months to June, that is a marked slowdown in the annual declines during the first two years of the pandemic

While retail capital values decreased 3.2pc over the 12 months to June, that is a marked slowdown in the annual declines during the first two years of the pandemic

While retail capital values decreased 3.2pc over the 12 months to June, that is a marked slowdown in the annual declines during the first two years of the pandemic

The Irish retail property sector is showing signs of stabilising and may even record an increase in capital values in the second half of this year. That is the view of Niall Gargan, head of research at JLL Ireland, based on his analysis of the JLL Irish Property Index.

The index showed that retail rents were practically unchanged in the second quarter of this year resulting in the first-half rents increasing by 0.2pc.

While retail capital values decreased 3.2pc over the 12 months to June, that is a marked slowdown in the annual declines during the first two years of the pandemic when they fell 15.3pc and 12.3pc in 2020 and 2021.

Despite recent concerns about the impact of soaring energy inflation on the sector, Mr Gargan points out that: “Occupier demand has increased in recent months, despite the softening of the economic outlook, and this has been reflected in decreasing vacancy rates. Additionally, despite declining consumer sentiment, the number of debit card transactions were 22pc higher in July 2022 than in the same month in 2020. These are contributing factors for an optimistic outlook for the retail sector should no additional economic shocks arise.”

The index also shows some insight into the residential investment market. It monitors a portfolio of three such properties worth almost a combined €102m. Their rents grew by only 0.8pc in the second quarter curtailing the first-half growth to 2.5pc and the year-on-year growth to 1.9pc.

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