Chartered surveyors in Ireland have said coronavirus, Brexit and the makeup of the new government will have huge impacts on the commercial property market this year.
The Society of Chartered Surveyors Ireland (SCSI) have published their Commercial Property Review and Outlook.
Surveyors say the strength of the domestic economy and the delivery of a new UK-EU trade deal will be key issues this year. However, the impact of the evolving coronavirus situation and the make-up of the new government will be hugely significant.
“At this point, it’s not possible to accurately predict the societal and economic repercussions of the virus but it is clear it will have an impact on the world economy this year. When one considers the open nature of the Irish economy, it is obvious that the virus is a significant risk to economic activity,” the report notes.
The survey shows that the star performer of the commercial property market in 2019 was the prime industrial sector, with rents soaring 29% during the year in Dublin driven by the demand for high spec new units from logistic, tech and data firms.
Fifty-six per-cent of respondents to the survey believe the supply of prime industrial high stock over 500msq will not meet the demand of firms seeking to grow and expand their operations. In Munster 100% of respondents believe demand will outstrip supply.
The survey found that competition in industrial property is most intense on the outer ring of the capital but the commercial agency surveyors say demand is also high in Galway, Athlone, Waterford and Cork.
According to the 400 commercial agency surveyors nationwide who took part in the survey, prime third generation office rents in Dublin increased to €675psm, an 11% increase year on year, while in Cork the corresponding figure was €250psm, a 12% increase.
Surveyors predict overall office rents will only increase by a modest 1% to 2% this year.
The President of the Society Johanna Gill said there was a sense in 2019 that much of the market activity was tenants moving around, with few new tenants coming into the country.
- she said.
She said SCSI members were seeing little new development activity in provincial towns, as the overhang of property commenced during the ‘Celtic Tiger era’ reaches financial viability and is completed.
“This has long been a concern for the Society, and we would like to see much more being done by government to encourage small and medium-sized businesses to locate in provincial towns as outlined in Project Ireland 2040” she said.
The increase in stamp duty announced in October’s Budget was the dominant issue in the final quarter of 2019.
According to the report surveyors strongly believe the increase has and will continue to have a negative impact on the performance of the market.
In relation to retail activity, Ms Gill said smaller towns are facing particular challenges.
“Several surveyors noted that these towns are often bypassed as people head to the cities to do a bigger shop. Some of them are trying to support a high street and an out of town shopping centre but it’s very difficult to maintain activity in both.”