Unusual dynamic in the Irish commercial property market

CBRE report occupier markets performing well while investment sector remains weak

Article posted: 03 May 2011

Property consultants CB Richard Ellis have just released their May bi-monthly report, which indicates that there are significant variations in the performance of the various sectors of the commercial property market in Ireland at present. Encouraging levels of activity continue to be recorded in the occupier sectors of the commercial property market in Ireland and the number of properties being brought to the market has increased in recent months.

However, despite the fact that property values are now showing signs of stabilising, activity in the investment sector of the Irish market remains disappointingly weak, with potential investors holding off making investment decisions, primarily as a result of the uncertainty prevailing regarding Government proposals to retrospectively review rent clauses in all business leases.

Take-up of office space in Dublin has been strong over recent months. A number of significant office letting transactions are currently in legals and are due to sign over the coming months, suggesting that take-up will remain strong in forthcoming quarters despite the underlying economic situation. There are also a number of large requirements which have yet to be fulfilled, which is encouraging although with lease negotiations proving very protracted at present, many of these office lettings may not have signed by year-end.

The development pipeline in the office sector however, has now firmly come to a halt with no new office schemes under construction at present in the Irish capital.

Commenting on the launch of the May bi-monthly report, Marie Hunt, Director of Research at CB Richard Ellis said “With NAMA’s influence on the market becoming increasingly evident, the dynamic of the Irish commercial property sector is unusual at the present time. The office, retail and industrial occupier markets in Dublin continue to perform well, as a result of occupiers taking advantage of current market conditions. There is also genuine demand for smaller lot size properties that are brought to the market quoting realistic prices.

“However, activity in the investment sector of the Irish commercial market for the most part remains very weak and this situation is unlikely to change until such time as the Government provides some clarity regarding their proposals on rent reviews.”

A PDF copy of the full CBRE Bi-Monthly Research Report, May 2011 is available at: http://www.cbre.ie/portal/pls/portal/CBWEB.utils_news_public.show_image?id=6977&field=doc1&trans=n

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Posted by Janet