Returns on investment in property stable in Q3
The latest JLL Property Index shows that overall returns from investment in the Irish property market increased by 3.8pc in the last three months and by 13.1pc in the last 12 months. This combined capital and income return is made up of stable growth in both capital and rental values.
Capital Values increased by 2.6pc in the quarter and 7.6pc over the year. In the past quarter, this growth was driven by the performance of all three of the main commercial real estate sectors, with offices recording the strongest increase (4.6pc), followed by industrial (2pc). There was no change for retail.
Overall, capital values have increased by 87.4pc since the bottom of the market but still remain 38.5pc lower than the peak in the third quarter of 2007.
Income increased marginally (0.7pc) in the last three months after a decrease of 5.1pc last quarter. Rental values across the entire index portfolio rose by 1.6pc in the last three months and are now 8.5pc higher than 12 months ago.
Retail had the greatest increase (3.7pc), followed by industrial (3.1pc), with no change for offices. Overall, rental values across the entire index portfolio increased by 1.0pc in the last three months and 8.6pc in the last 12 months. Offices had the greatest increase in the quarter (1.6pc), followed by industrial (0.7pc) and retail (0.1pc).
JLL divisional director and head of research, Hannah Dwyer said: "The index continues to show stability, with a steady income return of 3.8pc in Q3.
"In the last 12 months, investors have achieved strong overall returns of 13.1pc."
However, Ms Dwyer said it was important to note that the latest index, covering the three months to the end of September, did not include the changes to stamp duty introduced in the Budget. She said this would cause a reduction in the value of all commercial property, which will be almost equal to the 4pc stamp duty increase.
Ms Dwyer added: "Stamp duty is a cost incurred by the purchaser during an investment transaction and forms part of the overall gross capital value.
"The gross value will not change, but with an increase in the costs for the purchaser, that can only lead to the equivalent percentage reduction in the net value of the asset.
"This will have an automatic impact on net values in the Q4 index results."