Trends in improving rents and values in all sectors
Many members of the Society of Chartered Surveyors Ireland (SCSI) expect the outlook to improve across all sectors of the Irish commercial property market, according to the Ireland Commercial Property Monitor for the third quarter.
The results indicate that the recovery is gaining ground in the market, with measures on demand for occupiers and investments in all sectors turning positive for the first time since before the pandemic … ending a string of six negative readings consecutive, ”he said.
The key factor driving the improvement has been an acceleration in tenant demand for industrial space, rents for prime industrial premises are expected to increase by 6% over the coming year as Secondary industrial rents could increase by almost 3.5%. Demand for office space appears to have stabilized.
In the retail market, occupant demand continues to decline, but its rate of decline has slowed significantly from the start of the year, according to the survey, which is part of a global follow-up by the Royal Institute of Chartered Surveyors (RICS).
Turning to the 12-month outlook for capital stocks, respondents expect industries to strengthen, going from a 5% growth forecast in the second quarter to 6% growth in the next 12 months. The values of prime offices are expected to increase by 1 pc, unlike the declines expected in the previous quarter. However, secondary office values remain a bit under pressure with expectations of a decline of around 50 basis points (BPS). Nonetheless, this is still an improvement over Q2 expectations for a drop of 400 BPS.
Max Reilly, chairman of the SCSI Trade Agencies Group, said that despite the worsening situation of Covid since the investigation was conducted, he believes the overall outlook as emerging from the investigation always remain a true reflection of the current opinions of the members.
This improved outlook is also underlined by a report in Irish weather that the German fund Deka Immobillen concludes an agreement for the purchase of 8 Hanover Quay, Dublin 2, for more than € 41.5 million cited by the agents BNP Paribas Real Estate and Savills. The offices are occupied by Airbnb and a BNP Paribas REIM fund is the seller.
The RICS survey also shows reduced pessimism for retail capital stocks. While blue chip retail values could fall by around 1pc, this is better than the dreaded 4pc drop that was feared in the second quarter.