UPLIFT IN ACTIVITY IN THE COMMERCIAL PROPERTY MARKET EXPECTED IN AUTUMN
1st September 2010 | The Dublin office of CB Richard Ellis Group (“CBRE”), the international commercial real estate firm, today launched their latest bi-monthly assessment of conditions in all sectors of the Irish commercial property market.
Report Highlights (please see link further below for a PDF copy of the full report)
► An encouraging level of activity ongoing in the office sector of the market with expectations that as much as 100,000 square metres of take-up will be achieved this year in Dublin.
► Although activity in the retail sector remains uneven across retail businesses and sectors, retailers are still actively looking for opportunities around the country and in many cases securing premises on very attractive terms and conditions.
► There is wide variation in the rental levels being achieved in the industrial market at present with significant differentials between the rents being quoted for new and second-hand accommodation in all locations.
► Both NAMA and the various banks appear to be closer to initiating investment property sales and an improvement in the availability of investment product is expected over the autumn, particularly now that yields in the Irish market appear to have stabilised.
► Property values in the UK increased by more than 15% in the year to July 2010. The pace of the increase in capital values in the UK property market has however slowed over the last few months. Irish investors remain net sellers of real estate assets in the UK, as evidenced by a number of recent transactions.
► Dezoning land could ultimately lead to upward pricing pressures in some local authority areas in the future. Phasing the future development of existing zoned lands and reviewing this annually as opposed to every five years would appear to be a better solution.
► Considering the dearth of reliable information on the housing sector, the imminent publication of the Department of the Environment’s vacant housing audit is eagerly awaited. This study should finally produce accurate statistics to counteract a lot of the incorrect data that has been dominating the headlines over recent months and facilitate the production of accurate assumptions about house prices and ultimately land prices.
► There are now more than 40 Irish hotels in receivership, equating to over 4,000 bedrooms or almost 7% of the national hotel bedroom stock. With the loans of over 35 Irish hotels (and a further 13 outside of Ireland) having now been acquired by NAMA, some hotel sales are expected to emerge over the coming months as opposed to the trend over the last two years of putting management contracts in place, regardless of the future trading potential of the hotel property.
► The current strength of demand in the UK hotel market may encourage more Irish hotel owners to dispose of their UK hotel assets over the coming months.
► With prime office rents in Belfast some 60% less than in Dublin, it stands to reason that if the rate of corporation tax in Northern Ireland is reduced to make it more comparable with the 12.5% prevailing in the Republic, this would significantly boost foreign direct investment and job creation in the region, all of which would be positive for the Northern Ireland property sector.
Marie Hunt, Executive Director at CB Richard Ellis, Ireland, who compiled the report said, “Following the summer months which are traditionally quieter, we are now starting to experience an improvement in activity in many sectors of the Irish commercial property market. While rents remain under some pressure in all sectors, prime yields have stabilised and there is an encouraging level of activity ongoing in many sectors of the market, driven to a large extent by the attractive terms and conditions on offer in the current climate”.
Guy Hollis, Managing Director at CB Richard Ellis, Ireland said, “At the end of the day, the property market is a subset of the general economy. While transaction volumes are certainly improving in many sectors of the Irish property market, we have to be mindful of the global economic backdrop, which remains very fragile. Compared to this time last year, there has been a significant improvement in activity in the Irish market but confidence remains relatively weak and funding remains difficult to source. We are hopeful that there will be some improvement in the volume of stock coming to the market this autumn as NAMA and many of the banks move closer to the disposal of assets. This is important to boost transaction volumes but equally to set benchmarks for pricing and valuations”.
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About CB Richard Ellis
CB Richard Ellis 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 2009 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis 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, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 130 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. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2010, for the sixth year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni