Friday 23 March 2018

Dublin more competitive as rents fall

Donal Buckley

Falling Dublin commercial property rents and prices have improved the city's competitive attraction compared to many UK and European cities including Manchester, Birmingham and Glasgow.

A fall of 10pc in prime Dublin retail rents, to €2,115 over the 12 months to the end of September, has seen Dublin retail rents fall to 18th position out of 49 European cities.

However, the value of Dublin shops has fallen even lower in the rankings to 33 as a result of retail yields dropping 50 basis points to 6.0pc over the 12 months to the end of September.

Only two years ago Dublin retail rents were the eighth most expensive among 46 cities surveyed and at their peak they were in a top-five position.

With yields in Glasgow now as low as 5pc on the back of rents of €2,095 per sqm, this is one of a number of British cities which would offer a much less attractive return to investors than would prime Dublin retail investments.

These are among the findings of a recent rents and yields survey by CB Richard Ellis of almost 50 cities in Europe, the Middle East and Africa.

Dublin offices are even more competitive on both rents and prices, which should help the Irish economy to compete in attracting job creating inward investment.

With Dublin office rents down 8.36pc over the 12 months, to €296 per sqm, this ranks them 30 out of 52 cities and well behind the key UK regional cities which are ranked inside the top 20.

From an investor perspective Dublin offices look even better value as they are ranked 37 with a yield of 7pc, down 50 basis points in the 12 months.

This is a strong improvement in competitiveness since the first quarter of 2010 when prime Dublin office rents were the 12th most expensive despite rents having already fallen 44pc from their peak.

At that time valuers had already bitten the bullet and Dublin office values had fallen to their current position of 37th where they have languished since then.

Office rents in Edinburgh and Glasgow are now higher at €359 per sqm, while Manchester is the highest of England's provincial cities at over €399 per sqm.

But while Dublin's retail and office rents are falling more closely into line with the rankings for retail and office yields, the gap remains wide for Dublin's industrial rents and industrial yields in the EMEA rankings.

At €60 per sqm, Dublin industrial rents are ranked as low as 26 out of 42 cities.

In contrast prime Dublin industrial net yields at 9.5pc are ranked as high as ninth. Over the two and a half years since Q1 2010, industrial rents have fallen in ranking from being the seventh most expensive.

Indo Property

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