Only two Irish property investment transactions completed in Q1 2011

Sale of only two offices in three months follows year in which 29 transactions took place

Article posted: 04 Apr 2011

Property consultants CBRE last week confirmed that there were only two investment transactions completed in the Irish property market in the first quarter of 2011, a factor they directly attribute to plans by the new Government to retrospectively review rent provisions in existing business leases.

The property consultants earlier this year warned that a lack of clarity about these Government proposals would hamper investment activity in the Irish market – this prediction has now been borne out by the fact that only two investment transactions were signed in Ireland during Q1 2011 – the sale to Google of their offices in Dublin at Gasworks House and Gordon House at Barrow Street and the sale of an office building occupied by Ericsson in Clonskeagh.

This follows a year in which 29 transactions with a combined value of almost €242m were completed in the Irish market, with approximately 30% of this value being attributed to non-Irish buyers.

CBRE say that from a legal perspective the implementation of a retrospective review of rent provisions in existing lease contracts will prove a huge constitutional challenge. The property consultants predict a long period of uncertainty until this issue is taken to the Supreme Court which they say will have huge consequences.

According to Sean O’Brien, Investment Director CBRE Ireland, “Commercial rents did become too high during the boom and in the current environment need to be adjusted to restore competitiveness and sustainability. This process is already actually underway as leases expire and new rents are negotiated between landlords and tenants. However, the proposal as it stands, to impose a downward rent adjustment in all business leases will cause more problems than it will solve.

“It is very concerning that there were only two investment transactions signed in the last three month period. We urge the Government to address this issue immediately because otherwise in addition to stalling investment activity, there is potential to further erode commercial property values, which have already fallen by more than 60% from peak”.

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Posted by Sinead