Thursday 12 December 2019

Downward trend resumes in Q1 for property values

Donal Buckley

Donal Buckley

Irish property values resumed their downward trend in the first quarter of 2012, by falling 1.8pc after the halt in the trend in Q4 2011 when the Budget cut to stamp duty helped to stabilise the market temporarily.

These are among the latest findings in the SCSI/IPD Ireland Quarterly Property Index for commercial property trends.

Phil Tily, IPD managing director for the UK and Ireland, points out that the rate of decline slowed to its slowest rate since March 2010, and the total return, at 0.6pc, was positive for the second quarter in succession.

"On a cautiously optimistic note, there are tentative indications of improving conditions in the occupier market, as rental declines slowed to 0.8pc, their lowest since 2008," he added.

"Rents have fallen by 47pc in the last three years, which has made the Irish occupier market extremely competitive, and in the last few months a selection of multinational tenants have taken space or shown interest in the Irish market. After such falls, the sectors offer excellent value for occupiers," he said.

But in terms of prices he reckons sentiment remains guarded on capital values "with yield expansion still pushing down values".

In the retail sector, units on Grafton Street, Dublin, delivered the highest total return, of 1.3pc, and shopping centres delivered an equally encouraging return, of 1.2pc. Conversely, retail units on Henry and Mary Streets delivered a negative return of minus 1.2pc.

In the office sector, Central Dublin recorded a return of 0.8pc, as capital declines slowed to 1.7pc. Rental values in the sector fell by only 0.5pc, their lowest rate of quarterly decline since December 2008.

He says this slowdown in rental decline may "possibly be a result of increasing interest from international tenants moving to, or considering moving to, Dublin".

Tily continued: "Transactional activity remained muted, but this appears to be a result of careful due diligence on the part of investors.

"The Government's reforms announced during the budget are taking effect, but slowly, and there are more transactions expected as the year progresses."

Roland O'Connell, incoming president of the Society of Chartered Surveyors Ireland commented, "It is encouraging to see an improvement in conditions and in demand from both occupiers and buyers in the prime market in Dublin, which demonstrates that we are becoming increasingly competitive in terms of attracting international investment. This is a positive for the economy in terms of delivering returns to the exchequer and employment."

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