There are signs of stabilisation starting to emerge in the investment sector of the Irish commercial property market following the most significant downturn ever experienced, the Dublin office of CB Richard Ellis has said in a new report.
There are signs of stabilisation starting to emerge in the investment sector of the Irish commercial property market following the most significant downturn ever experienced, the Dublin office of CB Richard Ellis has said in a new report.
CBRE's mid-year investment market Marketview publication for 2010 states that there has been an improvement in transactional activity in the Irish investment market in the first six months of 2010 with EUR 105 mln invested compared to EUR 41.6 mln invested in the same period last year and with EUR 92 mln invested in the whole year in 2009. A number of these properties were purchased by overseas buyers who previously had not invested in the Irish market.
Total returns from commercial property in Ireland have now declined 57% from peak-to-trough but are finally showing signs of stabilisation. Although total returns from the Irish commercial property sector declined by a further 1% in the first half of 2010 and rental values remain under some pressure, this deterioration represents a significant improvement on the massive declines experienced in this market since 2008.
CBRE said that there is strong demand from a range of domestic and overseas buyers for quality property investment properties producing strong income. In addition to very real demand for prime property from a range of domestic and overseas investors, CB Richard Ellis believe that Irish institutions are now starting to see cashflows stabilising and could shortly starting purchasing properties again.
Recent sales include the sale by Irish Life of a portfolio of office properties for approximately EUR 52 mln, reflecting a yield of approximately 8.3% and the sale of a prime Grafton Street retail premises, occupied by AIB Bank, for approximately EUR 28 mln, reflecting a yield of approximately 6%. About 59% of the spend on Irish investment property in the first half of 2010 comprised office properties, according to CBRE.
However, there is a dearth of prime properties being offered for sale and NAMA have not yet brought any investment product to the market. Irish investors have been net sellers of real estate in the UK in the first half of 2010 as they attempt to recoup some or all of their equity and take advantage of the recovery in UK property values.