Irish commercial property values hit seven-year high
RETURNS on Irish commercial property reached a seven-year high last year as a recovery that "remains in its infancy" spread to retail and industrial sectors, according to a new report.
Property values rose by 3.2pc for the year – the first annual capital growth since 2007 – while income returns averaged 9.2pc, according to the IPD/SCSI Ireland quarterly property index.
It stated profits increased to 12.7pc in 2013 as the Irish property downturn passed its nadir and values increased – mainly driven by Dublin's office market.
Phil Tily, executive director at IPD, said last year was a year of transformation, with returns rising from 1.3pc at the start of 2013 to 5.7pc in Q4.
"It is encouraging to see capital growth already spreading out of the central Dublin office markets," he said.
"While the recovery remains in its infancy, the reforms made by the government in 2012 regarding the property sector have done much to restore confidence and stability for investors, and hopefully 2013 will be remembered as the year that Irish property market finally shook off the dark days of the downturn."
Heavy discounting of Irish real estate has pushed annual income returns to over 9pc, which has attracted a host of investors from home and abroad, and led to the successful launch of Ireland's first two real estate investment trusts (REITs).
However, it maintained that it has been austerity-led improvements that have finally increased investor confidence.
Real estate values began to grow in selected prime office markets at the start of 2013 the index stated, but headline level capital growth did not emerge until the third quarter, halting the 23-quarter decline that has seen values fall by over 65pc.