Pension Irish Property Fund - Quarter 3 2019

Irish property continues to attract core Asian and European funds – particularly for larger lot-size assets or portfolios.There were five deals in excess of €50m in the second quarter and two during quarter one.

The residential sector is growing in importance and taking up a larger proportion of the investment market.

Prime yields across the main sectors are at strong levels, with offices at 4%–4.5%, industrial at 5%–5.5%, retail at 3.5%–4.5%, and residential at 3.75%–4.5%. And activity levels across all occupational markets was strong during the third quarter.

Prime rents for offices in the central business district (CBD) have been stable at €55–€60 per square foot (psf) and some marginal growth has been seen in some suburban sub-markets, which range €20–€30 psf. The office sector is dominated by large-scale take up by, predominantly technology companies such as Salesforce and Facebook.

Looking ahead, total property returns are expected to moderate further as capital growth becomes a factor of individual asset-management initiatives, rather than market-level rent or yield movement.

Declining valuations in regional and secondary retail assets are expected, as investment sentiment and lower occupational demand for such products continues to wane.

 

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