Total returns from Irish commercial real estate outperformed the UK by 0.3% in the three months to 30 June, according to the IPD’s monthly index.
Total returns were positive for the third consecutive quarter, standing at 0.6%. However, real estate values continued to decline, falling by a further 1.8% during the quarter.
Irish property is now some of the most discounted in the world, and income returns are once more starting to look competitive, although only if sustainable tenants can be found.
While investor interest in Irish real estate has gathered momentum, with some of the largest real estate deals in the past four years taking place in Dublin over the past quarter, real estate values remain depressed. Values have fallen by a cumulative 66% since September 2007.
Phil Tilly, UK and Ireland managing director for the IPD, said: “There have been a number of big name international lettings, particularly in the Dublin retail and office sectors, but the impacts of austerity cuts and the wider euro zone crisis are still limiting occupier demand, which continues to push down values.
“The same external drivers are leading to guarded valuer sentiment. Yield expansion was minimal, but continues to have a negative impact on market values.
“In relation to property performance in the UK, it’s more reflective of the UK market really suffering, rather than any outstanding performance in Ireland.”
sophia.furber@estatesgazette.com
