Prime Irish office yields languish in the rankings
PRIME Irish investment yields still languish lowly in the rank of the latest global survey by agents Cushman and Wakefield. It ranks prime Irish office yields at 37th in a league of 60 cities around the world.
This is a lower ranking than that attained for retail, at 28, or industrial investment yields, at 29. Such contrasting rankings seem ironic considering that Dublin's office lettings market is more in favour at the moment than are retail and industrial lettings.
Cushman and Wakefield, who are the international associates of Lisney, estimate prime Irish office yields at an average 7.75pc which is higher than the 7.25pc quoted by rivals CB Richard Ellis for Dublin offices.
Cushman's estimates for yields on prime shops at 6.85pc is also higher than the 6.25pc calculated by CBRE. On the other hand Cushman's yields for industrials are 8.85pc are lower than the 9.5pc being quoted by CBRE.
Cushman also remarks that while downside risks remain for Irish investment "2012 should see an improved performance and yields should stabilise".
CBRE is more bullish as it recently produced a report which saw yields across all prime Irish investment properties as trending stronger.
Cushman points to the 25pc fall in the level of investment in Ireland in 2011 to €179m. This saw Ireland ranked as low as 49 in the index ranks -- behind Portugal but ahead of Luxembourg.
Michael Rhydderch, Head of EMEA Capital Markets, Cushman & Wakefield, said: "In Europe, low risk investors will continue to have a wider choice of markets than they realise with the focus on Germany and the Nordics, particularly for retail.
"France and the UK are perhaps a little riskier -- with slower economic growth and more recent property price appreciation -- but they offer good medium term growth and higher return potential in development and refurbishment in London and Paris."
He continued: "Elsewhere, Poland is an easy pick to make but a crowded market to buy in and one that really has to be seen as more core than value-add these days.
"Indeed, for those seeking higher returns, they will need to look towards the fringe -- with Russia a very exciting market at present and Turkey set to perform well -- or towards what are currently less favoured segments of the market.
"In particular investors need to look at where distress is likely to emerge but can be married with attractive long term fundamentals -- be that from repositioning retail space in a range of markets, from an under-supply of modern retail or offices in some Italian cities or a shortage of modern logistics to rent in Spain and Portugal."