IRELAND – Plans to launch real estate investment trusts (REITs) in Ireland were this week unveiled by the country's government, in the hope that it would help grow interest in the troubled property sector.

The announcement, coming as part of the 2013 Budget, was made by minister for finance Michael Noonan, who also said an earlier 4 percentage point drop in stamp duty had "helped bring stability" to the commercial property sector.

Addressing the Dáil, Noonan said demand for high-quality office space had increased over the past year. 

He added: "In order to attract new investment, I will provide for the establishment of real estate investment trusts, which allow for investors to finance property investment in a risk-diversified manner."

In a presentation accompanying the announcement, the Department of Finance highlighted that the fund's listed status would provide "benefits of transparency, stability and liquidity" and said it hoped it would improve the level of residential investment in the country.

The minister further said the new Irish REIT would "assist" the National Asset Management Agency (NAMA) in deleveraging its portfolio.

NAMA had previously said it would attempt to attract overseas investors to its shores through the launch of one or several Qualified Investor Funds.

CBRE's Dublin office said it would welcome the launch of REITS, noting the model's past successes in countries such as Germany and the UK.

Sean O'Brien, executive director and head of investment at CBRE Ireland, added that a number of investors, including pension funds, would be attracted to the "ease of investment" the model could offer.

"It remains to be seen how a REIT regime is introduced in the Irish context," he added.

"The devil will be in the detail, but this is a very positive development for the property industry in Ireland and will certainly help in recapitalising the market as the banks and NAMA continue to unwind their exposure to property."

Research by CBRE had previously noted a "stabilisation" in the commercial and housing market in Ireland, with executive director Marie Hunt saying last month that the number of transactions had "escalated" over the course of autumn.

Recent data from IPD had shown that the second quarter of the year had seen the third consecutive quarter of positive returns on Irish real estate, but that this was unable to offset the continued decline in asset values within the market – totalling 66% since September 2007.

The Central Bank of Ireland in October warned that the country's market could take up to two decades to reach pre-crisis levels, citing comparable crises in Nordic countries such as Finland.