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Irish Real Estate Market In Recovery Mode

Thursday, January 30, 2014

Commercial property in Ireland generated returns of 12.7 percent in 2013 amid recovering property values, according to the IPD/SCSI Ireland Quarterly Property Index.

Generally, property values in the country increased by 3.2 percent last year, the first yearly capital growth in seven years. Income returns, meanwhile, averaged 9.2 percent.

Phil Tily, executive director at IPD, said that returns climbed from 1.3 percent at the beginning of last year to 5.7 percent in the fourth quarter. Capital values grew 3.6 percent in the fourth quarter.

Growth in the commercial real estate market was initially focused on the office sector before spreading to the retail and industrial sectors in the fourth quarter of 2013. Retail assets experienced a 2.1 percent rise in capital values in Q4, generating a total return of 3.8 percent, while the capital values of industrial assets rose 0.6 percent, providing a total return of 3.5 percent. In the same period the office sector returned 7.2 percent, with a five percent increase in capital values.

Mr Tily commented that: "It is encouraging to see capital growth already spreading out of the central Dublin office markets."

The positive performance of Ireland's commercial property market has been attributed to reforms implemented by the government in 2012 which have helped to restore confidence and stability for investors. Heavy discounting of real estate in the country boosted yearly income returns to more than nine percent and enabled the launch of the first two Irish real estate investment trusts.