IRELANDS - Returns on Irish property reached 16.9% in the year to June, despite a continuing exodus of domestic investors into other European real estate markets.
IPD figures published last week showed returns on Irish real estate rose from 2.2% in Q1 to 3% in Q2, contrasting a flat return of 0% for equities and a negative return of 3.2% on bonds.
IPD attributed the returns to rental growth – in contrast to yield compression in the previous four years. Quarterly capital growth of 2.1% comprised 1.8% rental growth, with a fall in yields adding 0.5% to capital values. Rental growth was 2.4% in retail and 1.7% in office.
Industrials, with a 3.2% return, made up the best-performing sub-sector, compared with 3.1% for retail and 2.9% in office.
Research manager Angela Sheahan said despite recent good performance from office, the yield impact had "taken off in industrials in a way it hasn’t in other sectors".
She identified strong domestic and international investor demand for – and short supply of – industrial real estate in southeast Dublin.
Although Sheahan was reluctant to speculate on whether the upturn was sustainable, she said: "I’d say it’s part of a pattern, rather than an anomaly."