Improvement in Irish commercial property market expected in 2011

Report from Dublin office of CB Richard Ellis predict increase in transaction volumes

Article posted: 26 Jan 2011

The Dublin office of CB Richard Ellis Group last week launched their long-established annual commercial property outlook report. Within the Outlook 2011 report, the property consultants make a number of key predictions for the Irish commercial property market over the next 12 months.

While the outcome for the commercial property sector is largely dependent on the direction the wider economy takes over the course of the next 12 months, CBRE say that 2011 should see the commercial property market emerge from the most significant and unprecedented crash it has ever experienced.

A notable improvement in transaction volumes is expected in many sectors of the Irish commercial property market in 2011 with the bulk of demand for prime investment properties emanating from overseas investors. A total of 29 investment transactions totalling €241.7m were transacted in the Irish market in 2010, a marked improvement on the €92m generated from 13 investment sales in the previous year.

No rental growth is anticipated in any sector in 2011 with rents and values, other than for prime buildings in key locations, expected to experience further declines over the course of the year.

Offices in Dublin experienced an encouraging level of take-up with 187 lettings totalling 1.39m sq ft completed last year. Take-up in the key occupier markets (office, industrial and retail) is expected to hold up well with demand primarily driven by cost conscious occupiers taking advantage of the competitive environment and attractive deals on offer, as was the case in 2010. The most active occupiers in the office sector are expected to be high-end software companies, pharmaceutical companies and the online gaming industry.

High levels of vacancy in the office sector will start to be eroded from 2011 onwards, particularly as the development pipeline has now been firmly curtailed. However, further rationalisation in the banking sector and the public sector could dampen this effect by adding more stock to vacancy.

Guy Hollis, Managing Director at CB Richard Ellis, Ireland said, “The outlook for the commercial property market is uncertain. However, following the IMF/ECB intervention and the publication of the Government’s 4 year strategy, there is now some certainty in relation to the level of austerity that our economy faces over the coming years. This I believe will force us to adjust to the new reality and move on to the next stage of the property market cycle over the course of the next 12 months.”

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Posted by Sara