Spare a thought for poor old Marie Hunt, Head of Research at property powerhouse CB Richard Ellis. – she gets a complete page all to herself in the recently-published Shane Ross/Nick Webb book “The Untouchables”. Marie’s market commentary from before the boom where she anticipated a soft landing might be the subject of much merriment amongst some who didn’t act on the prevailing advice at the time, and of more serious finger-pointing by those who did, but remember, the woman’s name is “Marie Hunt” and NOT “Marie Gypsy Rose Lee Hunt”. Property experts are best able to tell you what has happened in the past and what is happening at present – as for the future, the only person claiming to know that, is the NAMA chairman Frank Daly who assures us he has an infallible spreadsheet macro which accurately predicts property prices. Marie Hunt certainly can’t tell the future, but she should be able to give us a sure-footed assessment of what is happening right now.
So today, we get CBRE’s commercial property commentary for September and October 2012. CBRE claims there has been an “escalation in activity” in the Irish commercial property sector recently. But “activity” includes supply of property and viewings and expressions of interest. If you look at the cold numbers, it’s pretty depressing.
Commercial property prices are dropping by an annualised rate of 10% according to the most recent Jones Lang LaSalle index – something not referred to by Marie. Rents are declining by about 3% annualised, again not referred to but Marie does say that prime rents are stable.
Investment property transactions stand at €271m for the first nine months of 2012. How does this compare with 2011? CBRE doesn’t tell us – tsk, tsk Marie! In fact it is up on the €180m reported for all of 2011 though considerably down on the €3bn recorded in 2006. Considering the incentives created in Budget 2012 last December – the reduction in commercial stamp duty from 6% to 2%, capital gains concessions and the abandonment of Upward Only Rent Review reforms – the figure is still very low indeed.
In terms of commercial property being rented, CBRE is upbeat, but what CBRE doesn’t tell us is how many new rental transactions are offset by old leases expiring. If Company A rents 10,000 sq ft in Building A for €15 psf and that lease expires and Company A rents 10,000 sq ft in Building B for €10 psf, then there is theoretically a 10,000 sq ft rental transaction but it really doesn’t tell you much about the property market. The only people for whom CBRE’s rental uptake figures are of interest are CBRE and its ilk and lawyers who draft leases and removal companies.
CBRE says yields on prime commercial property are stable or stronger and CBRE claims that prime Irish retail is generating 6% yields.
The report is downbeat on Northern Ireland with a reported slowing of both commercial sales and rentals.