Report shows pick-up in commercial property
As NAMA and the banks start to put properties up for sale that should help inject further demand, the latest bi-monthly report from CB Richard Ellis said.
Higher activity is starting to emerge, particularly in the Dublin market, and the report suggests 100,000 square meters of space will be taken up by the retail and other sectors in 2010. Across the country, the evidence suggests demand is patchy as the depressed economy continues to undermine sentiment.
The report warns of a threat to the economy if corporation tax in the North is reduced closer to the 12.5% that applies in the Republic.
Belfast rents are 60% less than in Dublin and a move to cut corporation tax there would pose a threat to inward investment, said Marie Hunt, executive director at CBRE.
In the Republic, more than 40 hotels are in receivership, equal to 4,000 bedrooms. or almost 7% of the national hotel bedroom stock.
With the loans of over 35 hotels passed to NAMA, Ms Hunt said hotel sales should start to happen. That should provide a boost to a sector that has seen management contracts put in place by the banks to prevent loans being written off.
The strength of demand in the British hotel market may encourage more Irish hotel owners to dispose of their British hotel assets, the report said. Activity in the retail sector remains uneven, with retailers securing premises on “very attractive terms”, the report said.
Rents are starting to stabilise and that will help the tentative recovery.
“We are now starting to experience an improvement in activity in many sectors of the Irish commercial property market. While rents remain under some pressure in all sectors, prime yields have stabilised and there is an encouraging level of activity ongoing in many sectors of the market, driven to a large extent by the attractive terms and conditions on offer in the current climate,” said Ms Hunt.
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