It is not yet clear what impact the new commercial leases database that will be published by the end of March 2013, will have on the market generally, but the betting would be at the secondary end where there is still vast oversupply and where it is still a buyers’ market, it will push prices down as, who will want to pay a premium on the lowest comparable rent in such a market. At the prime end, the jury is out, and research from property powerhouse and NAMA valuation panel member, CB Richard Ellis suggests that rents in prime central Dublin have begun to edge up.
In its report which it publishes every two months and which was published on Friday last – available here with press release here – CBRE says prime Dublin city centre office space rents have inched up from €27.50 in 2012 to €28.50 per square foot, and this is the first increase in six years, says CBRE. Prime Belfast property rents for €10.70 psf (or GBP 134.50 per sq metre).
CBRE has trimmed prime yields by 0.25% on the back of the “weight of money chasing prime investment opportunities in the Irish market”
At least six new residential developments have commenced in Dublin, and CBRE notes recent planning applications, which together suggest some optimism or confidence for the residential market in and around Dublin, at least.
There were an impressive 24 hotel transactions in Ireland last year which accounted for a total spend of €146m. Given the Burlington hotel sold for €67.5m, the average price for the other transactions looks modest. The report suggests that conditions in the hotel business improved markedly in 2012 with room rates, revenues and occupancy up nearly 10%.
There is some rich information on recent transactions reflecting CBRE’s role in the property market and also the amount of research that goes into these two-monthly reports. In terms of investment sales this year, CBRE reports “notable transactions completed since Christmas include the sale of the Bishop’s Square office building in Dublin 2 to US investor King Street for €65 million, reflecting an initial yield of 9.8%; the sale to German fund GLL of two adjoining buildings on Grafton Street for a reported €40 million, reflecting an initial yield of 6.9%; the sale of St. Martin’s House in Baggot Street, Dublin 2 to German investors for a reported €22.5 million, reflecting a yield of 13.26%; the sale to an overseas investor of the SAP office building in Citywest for €14 million, reflecting an initial yield of 11.2%; the sale of an office building on Burlington Road, Dublin 4 for €13.1 million, reflecting an initial yield of 7.25%; the sale of a 62 apartment development off the North Circular Road in Dublin 7 for €9.6 million to an Israeli investor”
In the UK, CBRE says that Irish investors sold a staggering €2.4bn of property in 62 separate transactions in 2012 and that sales activity is likely to continue in 2013.
According to Marie Hunt, Executive Director and Head of Research at CBRE, the outlook is positive for transaction activity.