There could be a "significant reduction" in the building of new commercial and private rented sector properties - typically apartment blocks sold to big international investment funds - if the coronavirus outbreak continues to prompt a fall in the value of Irish property-related share prices, Davy has said.
In a research note Davy said equity market weakness following the outbreak of the coronavirus has resulted in the valuations of Irish-listed property stocks falling below replacement costs.
"If this persists, then we can expect a significant reduction in new supply. The market is now pricing in a downcycle in Ireland," said Davy analyst Colin Grant in the note.
Shares in Irish property-related companies Ires Reit, Hibernia Reit and the Dalata Hotel Group all saw hefty double-digit percentage falls last week as virus-led selling fever gripped stock markets.
"The stock market tends to lead the direct real estate market. So, if current share prices persist, then a significant amount of planned supply will not materialise as it would be value destructive," said Mr Grant.
"Supply that is already under construction will be delivered, but we would expect new supply in commercial real estate and the PRS market to taper off unless market conditions improve," he said.
The so-called private rented sector - or PRS - has grown significantly in recent years; driven by institutional investors and international property funds looking to buy residential apartment blocks. Such transactions helped the PRS market to overtake the office market in terms of Irish transactions last year.
Davy also said that policy uncertainty in the aftermath of the general election has weighed on Irish property stocks.
"Proposals to increase stamp duty and introduce a rent freeze are aimed at reallocating construction sector resources to the residential owner-occupier market, where there is a clear supply shortfall. However, resources allocated to the commercial real estate and PRS markets will naturally reduce if current share prices persist - making these proposed policies unnecessary," said Mr Grant.
He said Ireland has one of the widest divergences between listed and direct real estate market valuations of anywhere in Europe.
"Equity investors are pricing in a downcycle while the direct market is strong. There is no downcyle priced into other European markets such as Sweden and Germany, where stocks remain in strong uptrends," he said.
Meanwhile, Irish commercial property landlord Yew Grove Reit has said it has a "robust" pipeline of expansion, with around €120m worth of acquisitions on its radar. The company said it grew the value of its portfolio from €78m to €116m - largely through acquisitions - last year and boosted its net rental income by 267% to €9.4m.