The rush into Dublin’s office market is far from over, according to the Investment Property Databank (IPD).

Despite strong growth in the Irish capital’s office rents – and a strong level of income return leading to competitive pricing – the market still has a long way to go before it comes close to a full recovery.

The IPD Dublin Office Rental Report for Q2 2014 found that quarterly rental growth averaged 4.3% since the recovery began. IPD said that if the trend of consistent growth continues, office rents in Dublin would not be back to their previous levels until at least 2016.

At the height of the crash, yields for Dublin moved out to 8.8%. By June this year, yields had fallen to 7%.

Dublin’s position is enhanced by the potential for rental growth and yield compression. With rents and yields yet to reach their previous peaks, IPD said “additional strengthening may be likely”, citing the constrained supply that could drive office rents upwards.

“This will boost capital values, which will in turn drive investor total returns,” the firm said, having based its analysis on a sample of 80 properties with a combined value of €1.26bn – around half of the total IPD Ireland property market stock.

IPD said that, by June this year, capital growth – at 26.5% – was the primary driver of the 36.6% total return.

Colm Lauder, senior associate at IPD/MSCI, said: “While this stage of the recovery has been brisk, historic trends would suggest yield and rents still have some way to go, and as these are the key drivers of income and capital return, further gains may be expected.”

The Dublin office investment market is, Lauder added, “almost unrecognisable compared to three years ago.”