Irish commercial property prices have dropped by over two-thirds since reaching their peak and are now at 1983 levels, according to a report released by Goodbody Stockbrokers.
Dublin Docklands
The country is moving out of, what has been described as, a “painful recession.” During this time, investment accounted for just under one-third of the GNP (31per cent) relative to a long-term average of 23 per cent.
The recovery is expected to be a muted one and will not be evenly balanced throughout the country. Urban areas have been receiving the bulk of the benefit of foreign investment coming into the country and with vacancy rates expected to continue to fall, the office sector offers good prospects for growth over the next few years.
The Dublin office market is poised for strong growth due to a lack of quality stock in key locations. No new builds are planned until at least 2016 and the last one was built in 2011, which should keep the market tight as demand increases.
Rents are currently at half of the peak 2007 levels, but are expected to increase. Returns are attractive in other commercial markets but face “more fundamental challenges” at present.
The retail sector remains the weakest of all the commercial categories, and yields and values are continuing to fall sharply this year. Yields are still at attractive levels but the industry faces some challenges. Consumer spending is low, as shoppers are drawn to online shopping as well as out-of-town developments when making purchases.
Industrial rents are on the rise, increasing for two consecutive quarters, and there has been a notable increase in transactions, leading analysts say there is reason to be “cautiously optimistic” in this sector.
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