IRELAND - Irish property returned just under 10% in 1007, despite dropping 2.3 percentage points to 1% in Q4, according to IPD data published last week.

The annual return compares unfavourably with 27.2% returned in 2006, although property continued to outperform both equities and bonds. At the same time, it also indicates Irish commercial property has yet to fully feel the fallout from global financial market turbulence.

Asked if a comparable fall was likely, IPD research manager Angela Sheahan said: "We haven't seen one yet, though we could do. The UK has taken a massive hit but Ireland has a different set of investors. Pension funds are present and prominent in both markets, but unit trusts - which were marketed to retail investors in the UK and have now in some cases closed their doors - are not present in Ireland."

She added: "Irish investors can afford to sit and wait."

Strong rental growth pushed office into the best-performing category for the second year and in each quarter, with industrial second thanks to favourable yield movements. Retail, which benefited from neither trend, was pushed into third.

Sheahan rejected a recent suggestion by CB Richard Ellis that there was a danger of oversupply in the retail sector, given a likely slowdown in consumer spending.

"I'm not aware of any major developments close to completion," she said. "In any case, multinational retailers are unlikely to be hit that badly by a downturn."

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