Returns stabilising in commercial property market

CB Richard Ellis Group recently launched its mid-year investment market publication for 2010, which revealed that there has been an improvement in transactional activity in the Irish investment market in the first six months of 2010. A total of €105 million was invested compared to €41.6 million invested in the same period last year and with €92 million invested in the whole year in 2009. A number of these properties were purchased by overseas buyers who heretofore did not invest in the Irish market. The report also showed that total returns from commercial property have now declined 57% from peak-to-trough but are finally showing signs of stabilisation. Although total returns from the Irish commercial property sector declined by a further 1% in the first half of 2010 and rental values remain under some pressure, this deterioration represents a significant improvement on the massive declines experienced in this market since 2008.


There is also strong demand from a range of domestic and overseas buyers for quality property investment properties producing strong income. However, there is a dearth of prime properties being offered for sale and NAMA have not yet brought any investment product to the market. The report also showed that Irish investors have been net sellers of real estate in the UK in the first half of 2010 as they attempt to recoup some or all of their equity and take advantage of the recovery in UK property values.

Marie Hunt, Executive Director at CB Richard Ellis, Ireland who compiled the report said, “The Irish commercial property market is slowly starting to emerge from the biggest downturn it has ever experienced. At more than 57% from peak-to-trough, the decline in Irish commercial total returns in the most recent cycle was more severe than ever experienced in any other previous cycle, primarily as it was caused by an unforeseen liquidity crisis and the withdrawal of foreign credit to Irish banks. However, we have to remember that it is a cycle and based on what we are now seeing on the ground in the Irish commercial property market, it is a cycle we are slowly starting to emerge from”.