The report outlines prime rent and yield movements in the core Irish commercial property sectors of offices, industrial and retail.
Based on prime property, this analysis provides current and forward-looking estimated movements in rental and yield variables. Five-year forecasts for each property sector in Dublin are produced using a rigorous econometric model and qualitative analysis, based on local market expertise. Also reflecting local market dynamics, a similar analysis is carried out for the regional locations of Cork, Limerick and Galway.
2018 was another year of growth for Irish commercial property featuring strong occupier and investment activity, driving rental growth and further yield compression across the core sectors. In Dublin, prime office rents are ahead of previous peak levels, while Dublin industrial yields are standing below their previous peak.
Forecasts for economic growth continue to indicate sustainable expansion in Ireland over the short-term, however the rate of Irish economic output will be heavily dependent on what exit deal, if any, the UK agrees with the EU this year. This instills a cloud of caution towards external geopolitical risks, given that any potential negative impacts are not factored into economic forecasts, but yet are to be considered.
Prime property yields in the core sectors are forecast to hold stable in 2019 and for some part of 2020. However, the turning point in monetary policy with probable interest rate movements across Europe later this year, and a forecasted rise in government bond yields, places pressure on property yields to move out from 2020 onwards. Nevertheless, investor appetite for Irish property is anticipated to remain strong, as both domestic and overseas investors increasingly search for stable, long-term income returns.