Commercial property market investment plunges by 90%

INVESTMENT in the Irish commercial property market plunged more than 90% in the last year but experts say activity is starting to pick up.

A report from property consultants CB Richard Ellis showed €41.6 million was invested in the commercial property market in the first half of the year compared with €392m in the same period last year.

However, €40m of this year’s investment was done in the last three months, which shows activity is starting to pick-up, according to CB Richard Ellis.

It also said there has been a notable reduction in occupancy rates and revenue per room in the Irish hotel market in recent months, at a time when hotels would generally be looking to boost revenue.

CB Richard Ellis says that negotiations are continuing on a number of high-profile hotel sales at the moment.

They say that tourist industry in the west of Ireland received a great early season boost with its hosting of the Volvo Ocean Race in Galway, but in general hoteliers are finding trading “very difficult” at the moment.

They say that there is much discussion about exorbitant VAT rates, the new tourist airport tax and minimum wage costs, which it notes are very high relative to the rest of Europe.

CB Richard Ellis said: “While it will take some time before we can herald a recovery in the Irish commercial property market, we are definitely seeing renewed activity in some sectors of the market in recent months and are encouraged that transaction volumes will improve in the second half of 2009.”

The property consultants say that until such time as excess supply in the housing and occupier markets is absorbed, funding for development land will not materialise in the Irish market.