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Marie comes up trumps with market predictions

At a time of uncertainty in the world's economies and financial markets it's nice to see that at least one economist can the future -- even if it is only for nine months.

Marie Hunt, director CB Richard Ellis Dublin, recently took a look back at her early 2012 predictions for Dublin's commercial property market and is pleased to find that she got so many of them right.

Last January she forecast that "prime rents will stabilise but rents for secondary properties will continue to decline. There will be a huge focus on lease re-gearing."

Now she reports that prime rents in all sectors of the Irish commercial property market have clearly stabilised in the first nine months of 2012, although there is still some downward pressure on rents for properties that are secondary in terms of location or quality.

As regards leases she reports that tenants are taking advantage of current market conditions to re-gear or renegotiate leases and landlords are engaging to protect income.

In January she predicted that capital value declines would come to an end. Prime yields would strengthen but secondary yields would continue to weaken further.

Now she says that, while aggregate capital values continued to decline in the period, prime yields for office and retail properties strengthened during 2012 due to the weight of demand for prime investment opportunities.

Prime Dublin office yields having strengthened by 25 basis points to 7pc while prime retail yields have strengthened to 6pc. Secondary yields have continued to weaken however.

In January she said: "Take-up in the occupier markets will weaken as some strategic leasing decisions are put on hold."

Now she reports: although there has been steady transactional activity in the office, retail and industrial occupier markets in the first nine months, it is clear that the overall volume of letting activity for the year as a whole will be down compared to recent years.

As with most European capitals, Dublin continues to be constrained by Eurozone uncertainty with many potential occupiers hesitant about taking space.

Consequently she forecasts that take-up in the Dublin office market will fall from 160,000sqm last year to about 100,000sqm in 2012.

She also forecast an increase in the volume of transactions in the investment, hotels and development land sectors with overseas investors dominant among prime purchasers.

Since that forecast, 12 investment transactions of over €1m in value have been completed in the first half of 2012, compared to three transactions in the same period last year.

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Non-Irish buyers accounted for 76pc of the value of the investment sales this year demonstrating the weight of overseas demand for prime investment opportunities in Dublin. Furthermore more development sites were sold in the first three months of 2012 than in the whole of last year last year. There has also been a rise in the volume of hotel properties being offered for sale and being sold

Nine months ago she predicted: "There will be an increase in the disposal of loan portfolios over the next 12 months. Now she says there is an escalation in the number of loan portfolios being brought to the market over the course of 2012.

Sydney-based Pepper Home Loans were confirmed as the purchasers of GE Money's Irish mortgage loan book. Meanwhile, Kennedy Wilson and Deutsche Bank were the successful purchasers of Lloyd's 'Project Prince' loan book of secondary office and retail properties in Ireland. There are a number of other loan portfolios on the market with considerable due diligence currently underway.

After predicting increased sale of residential investment portfolios, a new trend for Ireland, since then, there has been considerable interest from a range of international investors to purchase what they call 'Multi-family' or residential properties in bulk, with demand primarily focussed on prime schemes in Dublin.

Most notable of these was Kennedy Wilson and Fairfax Financial buying the Alliance apartment building in Dublin 4 for €40 million, reflecting an estimated net initial yield of 6.1pc.


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