Dublin’s industrial property market has seen sales broadly increasing year on year, according to new research released by Savills Ireland.
Property experts say that the proportion of transactions that resulted in a sale has doubled in the last year and that the vast majority of sales were to cash buyers, many of whom were business people using the opportunity to buy a vacant business unit at all-time-low prices.
Director of Industrial at Savills Ireland, Gavin Butler, explained: “For the first time since 2008 vacancy rates have fallen for two consecutive quarters as take-up outstrips the supply of space coming to the market”.
The report noted that Southwest Dublin continued to dominate with almost 80pc of Q3 take-up, while industrial take-up in Dublin was approximately 68,000 sq.m. in Q3 – the highest level since Q4 2010. Prime rents are in the region of €45 – €55 per sq.m. per annum with prime capital values ranging from €450 – €600 per sq.m.
“Despite another strong quarter of take-up, there remains a general oversupply of industrial space in the Dublin area. Consequently, rental and capital values remain subdued,” said Mr Butler.
“However, we predict a modest uptick in values next year for good quality modern stock over 1,000 sq.m. as the availability of this space continues to contract. There continues to be an overhang of units below 1,000 sq.m., and this segment of the market is likely to remained challenged, though making it attractive to cash buyers.
“Competitive bidding is resulting in higher prices being achieved in certain cases. With prices now significantly below construction cost, there is superb value for money in industrial property, particularly when the extension of the CGT waiver until the end of 2014 is taken into account. However, values will have to double before there is a return to any speculative development. Consequently, vacancy rates are likely to decline further, albeit moderately, over the coming months and there is likely to be modest rental growth for prime space in prime locations.
“We predict take-up for 2013 to be in the region of 225,000 – 250,000 sq.m. This will be the highest level of take-up recorded since the property downturn. The recent extension of the CGT waiver until the end of 2014 will help to drive industrial property sales over the next fifteen months,” he said.