Commercial property values to ‘fall further’

COMMERCIAL property values in Ireland will drop further before the level of transaction activity in the market improves.

That is according to property consultants, CB Richard Ellis, which issues its third quarterly market trend report for this year, today.

“The market has been characterised by a lack of transactional activity in recent months.

“Irish investors have signed only €392 million of investment transactions in Ireland in the first half of 2008, compare to €1.9 billion in the whole of 2007,” said Marie Hunt, director of research at CB Richard Ellis.

She added: “A similar trend has been experienced in Britain, where Irish investors have invested only €795m in the first six months of 2008 — a dramatic reduction considering Irish investors accounted for €5.5bn of investment transactions in Britain last year.”

The company is saying that yields will have to move further if more deals are to be agreed before the end of the year.

According to CB Richard Ellis (Ireland) managing director, Guy Hollis: “We believe that yields may have to increase by another 50 to 75 basis points to attract buyers. This could bring prime retail yields in the Irish market to 4.25%-4.50%; prime office yields to 5.25%-5.50% and prime industrial yields to 6.25%-6.50%.

“The reality is that there is a weight of money building up for investment in property in Ireland, but not at current pricing.”