Irish commercial property capital values continue to plunge, says IPD

Irish commercial property capital values continued to nosedive in the final quarter of 2008, eclipsing the previous quarter's record fall by tumbling -17.7%, according to the SCS/IPD Irish Quarterly Property Index, which is based on a portfolio of EUR 3.7 bn.

All property capital values slid -37.2% over the full calendar year, while total returns on investment in Irish commercial property were -34.2%, according to IPD. The most pronounced value falls, for the fourth consecutive quarter, were witnessed in the retail sector which fell -20.8%. The root cause of the retail sector's capital value falls was the pronounced yield impact, at -45.0% over the year, counteracting the growth in rental values, which rose to 3.4% over 2008 compared to 5.7% the previous year. All property rental value movement remained flat over the final quarter and reached just 2.0% for the year.

The scale of the final two quarterly losses of 2008 has pushed down the three-year annualised total returns to -6.1% for retail, -0.9% for offices and 2.5% for industrial while returns of -2.8% were realised on an all property basis.

'The market has been braced for further bad news from the final quarter of 2008 so the further steep falls will come as little surprise. However, to surpass the Q3 record capital value falls is another reminder of the extent to which the Irish market was over-priced prior to last summer,' said Angela Sheahan, IPD head of indices.