Property investment abroad continues

Tommy Barker, Property Editor

Four times as much money is invested in overseas commercial investment as in the home market, with the UK still in pole position soaking up as much as E2.5 million this coming year, according to CB Richard Ellis Gunne's Outlook 2005 report.

A further 500 million is likely to go into Continental European markets this coming year, and voyaging investors are also expected to seek further investment opportunities in places like Boston, Manhattan and Washington given the Euro/Dollar exchange rate advantage and the low cost of debt funding available, say CB Richard Ellis Gunne.

However, despite noting that penal stamp duty rates in transactions helps to account for the fact the Irish investment market account for just 20% (80 million) of sums invested, company MD Pat Gunne says "all indications are that it looks set to be a good year for the commercial property market in Ireland although the international economy and worldwide events will ultimately dictate the pace in 2005."

Dublin's recovering office market and the retail sector will continue to dominate, with the main focus being on sourcing large lot sizes, says the Outlook 2005 document.

"Syndicates have focused their attention on overseas property markets over the last number of years, but are expected to re-focus on the Irish market in 2005 on the back of improving conditions in the domestic occupational markets," according to the Gunne report.

It notes that private buyers, able to take advantages of pension investment, are likely to outbid institutions, with the latter most likely to consider speculative forward funding for aces to markets.

"On the back of improving occupation markets and a very favourable economic background, there is no doubt that demand will exceed supply in the Irish property investment market in 2005 and that it will be difficult to secure deals.

"Therefore, investors will increasingly have to look at the redevelopment potential of existing properties and consider forward funding vehicles to access new property for investment purposes," it states.

The year 2005 will be seen as the year of the revival in the office market, it forecasts, especially in Dublin city centre, where rents are likely to be on an upward trend. Prime yields will remain stable at 5.25%.

Recovery in suburban and provincial office markets will lag behind central Dublin's swing-back.

Retail will continue to be a strong market performer (though prime retail rents at 3.25% leave little room for further contraction) and growth is expected in 2005 from all main chains like Superquinn, Tesco, Musgraves, Spar, Dunnes Stores, as well as Lidl and Aldi.

New retail centres opening this year include Mahon Point, Dundrum, Scotch Hall in Dundalk, The Quayside in Sligo and Ballincollig Town Centre in October.

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