Irish retail property market to get more competitive

The Irish retail sector continues to perform strongly but conditions are becoming more competitive, according to CBRE's Irish Retail Market Bulletin for the third quarter of 2007. The property advisor notes that impressive consumer spending was recorded in the first half of the year, with Irish retail sales growing at more than 7% on an annual basis. Consumer spending is expected to slow in the coming months however, with interest rates on the rise and threats of a slowdown in the Irish economy in the medium term. These factors, combined with the huge amount of Irish retail development recently, could mean there may be oversupply in some locations. CBRE's research shows that the total stock of shopping centre accommodation in Ireland is now approaching 1.6 million m2, and retail park stock now exceeds one million m².

While the report says that prime retail yields in Ireland appear expensive in the context of higher interest rates and compared to other European locations, investors are still looking for prime retail investment opportunities in the country. About EUR 730 mln was invested in the Irish retail sector during the first six months of 2007, representing around 45% of total spend in the Irish investment market. The recently reported sale of a prime retail investment on Grafton Street for EUR 115 mln, reflecting a yield of 2.4%, demonstrates the prevailing strong demand. Although yields are softening in some sectors of the Irish investment market, CBRE remain confident that prime retail yields will remain stable.