Commercial Property in Ireland Booming

2005 is proving to be a booming year for commercial property in Ireland with market turnover projected to surpass EUR 1 billion by year end; a figure that was only previously reached in 1999 when the Irish economy was at its peak.

2005 is proving to be a booming year for commercial property in Ireland with market turnover projected to surpass EUR 1 billion by year end; a figure that was only previously reached in 1999 when the Irish economy was at its peak.

In fact the entire property market in Ireland is strong and in the first three months of the year the market sector outstripped returns from all other investment market sectors according to industry analysis out recently.

To June month end the commercial property market segment in Ireland is projected to turnover around EUR 600 million, and history shows us that turnover is generally even stronger in the second half of a year meaning that the projected EUR 1 billion could be significantly surpassed making for a record year for Irish commercial property.

If you compare Irish commercial property value and returns for 2005 to the 2004 figures you can see growth and strength.  In 2004 returns for the first quarter were 2%; in 2005 these figures grew substantially to 4.5%.  In 2004 the value of property rose by just 0.3% in the first three months of the year, this year however the growth rate was a strong yet sustainable 3%.  And when you compare property returns to stock market returns, again the results are positive, last year saw minus equity ‘returns’ and very low bond returns for example.

A great deal of the strength and stability in commercial property is derived from the office sector which enjoys steady yields of up to 5%.  It is this sector which will be the one to watch for the next twelve months as well according to experts in the commercial property industry in Ireland.  It is thought that rental yields will grow as demand for prime located developments increases.

Investors in Ireland are particularly keen on the retail sector at the moment as well which has seen steady rental increases since the millennium.  With low interest rates, high property values and a strong economy encouraging the general public to spend, retail outlets are doing well and demanding prime locations for which they are prepared to pay!

When you compare the popularity and strength of commercial property in Ireland with that of commercial property in UK and the European mainland there is a pattern of strength and growth emerging.  Irish and international investors are more likely to invest in commercial property in any of the main or emerging European countries than they are in straight equities it seems!