Overall returns on Irish commercial property investments were positive for the eighth consecutive quarter, with a 3.5% increase in the third quarter, according to the latest the Jones Lang LaSalle Irish Property Index.
In the last 12 months, overall returns have increased by +9.3%.
Overall Capital Values increased for the second consecutive quarter, with a 1.1% increase. The increase was supported by growth across all sectors, with the greatest increase for offices (+1.7%), followed by retail (+0.6%) and industrial (+0.5%). Year-on-year values have continued to fall, although only marginally, with a -0.9% decrease in the last 12 months.
Hannah Dwyer, Head of Research said that the Jones Lang LaSalle Irish Property Index had another positive quarter, showing continued signs of a steady recovery for the commercial property sector.
“The growth in the Capital Values Index in the portfolio is reflecting the uplift in values we have seen in investment market transactions in the last 3 months.
“Overall Income increased the quarter, compared to a -1.9% decrease last quarter. Although Income for the portfolio has decreased by -3.8% in the last 12 months, the portfolio is still generating strong overall returns of 9.1%,” Ms Dwyer added.
Rental Values increased overall for the second consecutive quarter (+0.8%), highlighting the continued stability in occupier markets. The steady ERV growth for offices (+3.3%) and industrial (+1.2%) was counteracted by a fall in retail ERV of -2.2% in the quarter.
“The continued fall in Retail ERV of -10.4% in the last 12 months highlights one of the challenges the sector continues to face. This is a reality for many landlords and investors, who have faced significant falls in values over the last few years. Although rents now appear stable for prime product, further rental pressure for non-prime units is still expected,” said Ms Dwyer.