Irish equities outshine property

IRISH equities are outperforming property investment by more that three-to-one with property giving a return of 8.8% over the last 12 months compared to a 27.5% return on equities, it emerged yesterday.

Results for the third quarter from the London-based Investment Property Databank (IPD) show that Irish equities outperformed property with equities giving a return of 5.4% compared to a 3.6% return on property.

IPD's Irish Property Index covers 344 properties, worth €3.7bn around 85% of all institutional investment in the market.

IPD's figures show that retail property outperformed equities in the last quarter with a 7.2% return made up of 6% capital growth and a more modest 1.2% income return. However, over the last 12 months equities with a 27.5% return outpaced retail property where returns were 22.1%, 16.6% capital growth and 5.5% income return.

IPD's Phil Tily said there is intense competition for prime retail space in Ireland and with more and more European retailers looking to Ireland for expansion rents have continued to hit new highs. IPD said the gradual recovery of the Irish property market continued during the third quarter of 2003.

"An improved market return of 3.6% for the quarter was again largely dependent on the strength of the retail sector," IPD said.

However, rental value growth at an all property level amounted to 0.8%, which IPD said compared favourably with the opening six months of the year.

"Equivalent yields continued their downward trend, falling for the fourth quarter in succession, down seven basis points.

"Capital growth of 2.2% combined with a 1.4% income return producing the highest quarterly return since the final period of 2000," IPD noted.

The independent index formulator said the Irish retail sector continues to deliver impressive returns.

"Although retail remains the prime driving force within the market, it has been supported this quarter by gains in the office sector, where three-month returns climbed to 1.9%," the company said.

IPD sees the market as strengthening and said this is underlined by an 8.8% return for the year, compared with a corresponding figure of 3.2% for the 12 months to September 2002.

"Property continues to outpace the bond market, which delivered a 0.0% return for the quarter, but fell short of equities, which continued their revival with a return of 5.4%," IPD said.