Cork retail property 68% off peak

Retail property values in Cork City have slumped by over 68% from their peak in 2007, the first analysis of the city’s retail property market shows.

Retail property value in Cork fell further than in Dublin, but positive trends are emerging, according to the International Property Databank.

Strong initial yields at low sales values now make Cork City an attractive option “to investors circling distressed, investment-grade assets,” notes IPD research analyst Colm Lauder.

The investment survey, done by the highly-regarded London-based body, said retail values in Cork had slumped by over 68% from their peak in 2007, compared to Dublin’s fall of 46% in retail investment values.

According to Mr Lauder, the initial yields for let retail property in Cork have tripled in the past four years and “falling values mean the sector is now heavily discounted. The income return of 10.3% for 2011 is the highest amongst Irish retail properties, by region, in 2011,” he revealed.

Values continued to fall in 2011, by 11.8%, total return for retail assets in the city centre was still -2.6%, and rental values said the IPD “remained in free-fall, suffering a decline of 22% in 2011, amounting to a cumulative decline of 51% from their peak.”

That compares with a rental decline of 43% in Dublin.

Cork’s retail sector offers good value for prospective tenants and, according to IPD, “with several high-quality developments completed over the last two years, such as Opera Lane, the city is in a good position to attract tenants keen on value”.

Double-digit income returns and greater clarity following the 2012 budget will make Cork of interest to investors, noted Lauder, but he added “until values and rents stop declining, there is unlikely to be any movement into the city”.

“UK and international investors will be considering all possibilities offered in Ireland, and not just in Dublin. They will buy where they believe value exists. Cork’s investment-grade retail properties, with solid tenants, offer extremely good value, and will be attractive to investors due to their strong income returns and competitive rents,” notes the IPD analysis.

A fuller Irish quarterly IPD report is due to be issued this afternoon.