Irish Commercial Property Outlook 2012

Dublin, 9th January 2012 – Property consultants CBRE today released their Outlook 2012 report outlining their predictions for all sectors of the Irish commercial property market over the next 12 months.

Please see the full PDF CBRE Viewpoint - Outlook 2012 Report available to download at the link below.

According to CBRE, the ongoing Eurozone debt crisis, financial issues and market volatility will continue to dominate over the course of the next 12 months but local economic, financial and political decisions will be the primary drivers of pricing and transaction volumes in the Irish real estate sector in 2012.

According to Marie Hunt, Executive Director at CBRE, Ireland, who wrote the report, “With the uncertainty that prevailed for much of last year now alleviated following announcements made in Budget 2012 and the domestic economy showing tentative signs of improvement, the commercial property market should stabilise in 2012 and begin to emerge from the most significant correction it has ever experienced. We expect to see a notable increase in transaction volumes in all sectors of the market in 2012. The road to recovery will however be a long one and values will only stabilise once there is sufficient transactional evidence available to provide clarity on pricing. The real estate sector now has to adapt to a scenario where debt funding is going to remain severely constrained”.

CBRE’s Top 10 Predictions for 2012
■ Rents for prime buildings will eventually stabilise in 2012 although rents for secondary properties will continue to decline as occupiers continue to take advantage of the ability to negotiate favourable terms and conditions in an oversupplied market. Occupiers will focus attention on renegotiating lease terms in an effort to cut costs and increase efficiencies, whereas landlords will focus on getting tenants to extend lease terms in order to preserve income streams.

■ The decline in capital values that has been a feature of the Irish market since 2008 will come to and end over the course of 2012, particularly following measures announced in Budget 2012. However, although yields for prime properties are expected to strengthen as transactional evidence materialises, yields on secondary properties will continue to come under pressure as the year progresses.

■ Overall levels of take-up in the occupier sectors of the market (offices, retail and industrial) are likely to decline somewhat in 2012 as some occupiers delay or postpone strategic location decisions due to economic uncertainty. In the office sector the threat of the implementation of a financial services transaction tax across the EU is worrying, particularly if this tax is not payable in the UK.

■ The Government’s decision not to proceed with retrospective lease reform will cause some retailers to re-assess their options.

■ There will be a notable increase in the volume of transactions in the investment, hotels and development land sectors of the Irish market in 2012 as banks, receivers and NAMA release more properties to the market. At the prime end of the investment and hotel sectors, overseas investors are likely to be the most dominant players.

■ There will be an increase in the disposal of loan portfolios in 2012.

■ There will be an increase in the sale of residential investment portfolios over the course of the next 12 months - a new trend for the Irish market.

■ There will be no new development activity in the commercial property sector other than where pre-letting agreements are secured and at higher rental values than prevailing at present.

■ Despite the lack of speculative development, any decline in the overall level of vacancy in the Dublin office market will be countered by buildings coming back on the market to let as companies consolidate operations.

■ A problem which is going to become increasingly obvious in 2012 and beyond is the growing prevalence of functionally obsolete accommodation in all sectors. Without a functioning debt market, this accommodation is set to become increasingly unfit for purpose and eventually won’t comply with health and safety and other legislative directives.

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CONTACT: Marie Hunt – marie.hunt@cbre.com 087 2727115
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

In Ireland, with offices in Dublin and Belfast, CBRE is the country’s largest commercial real estate services company, now employing over 120 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CBRE Ireland has been listed among the Top 100 Best Workplaces in Europe & the Top 50 in Ireland 2011, for the seventh year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni.

CBRE Viewpoint | Irish Commercial Property Outlook 2012
CBRE Viewpoint | Irish Commercial Property Outlook 2012