High-profile hotel and developments set to hit Irish market in H2

Transaction volumes in Ireland slowed during the traditionally quiet months of July and August, but activity in the occupier sectors of the market is holding up well as occupiers are taking advantage of the ability to negotiate favourable deals with landlords, according to the latest bi-monthly report released by CB Richard Ellis.

An increasing number of development sites and hotel properties are now being brought to the market and sales are materialising for these properties in cases where vendors' price expectations are realistic. However, the investment sector of the Irish market remains paralysed primarily as a result of ongoing uncertainty about impending government reform of upward-only rent reviews.

According to the property consultants, values in the commercial property market continued to adjust downwards in recent months to reflect the possibility of more conservative future cash flows. Having shown some signs of stabilising before potential rent review reform was first mooted earlier this year, Irish capital values declined by 7.6% in the first half of 2011, bringing the total peak-to-trough deterioration in values to more than 63%.

Despite the dearth of transactions in the investment sector of the market, CBRE expect a busy autumn season in the occupier sector although they say that most of this activity is opportunistic with 10-year leases with five-year break options now the norm.

'A number of high-profile hotel and development properties will be coming to the market over the coming months and where pricing is realistic, sales will materialise,' said Marie Hunt, director of Research at CBRE. 'However, until such time as Government unveil their proposals regarding reform of rent review clauses in business leases, transactional activity in the investment sector of the Irish market will remain constrained and prices and pricing will remain compromised.'