Property investment returns slow down in first quarter

INVESTMENT returns from Irish commercial property slowed during the first quarter of 2004 and were overtaken by returns from bonds for the first time since December, 2002 the Investment Property Databank (IPD) said.

Commercial property produced returns of 2.0%, nearly half those of the previous quarter, and behind bonds at 3.3% and equities at 6.1%, the fund benchmarker said in its quarterly Irish market report.

The slowdown stemmed from a marked decline in capital growth to 0.6% in the first three months of the year, compared with 2.3% previously. Rental values have stabilised and were unchanged from the end of 2003, IPD added. However, the continuing reduction in investment yields (rent as a proportion of capital value), by four basis points to 5.82%, suggest the confidence in the Irish commercial property market built-up during 2003 has been carried forward into 2004.