Slowdown in Irish property returns

MSCI has recorded a slowdown in Irish property returns to 2.1% in Q3 of 2016, from 3.1% in Q2. The IPD/SCSI Ireland Quarterly Property Index also showed a significant fall from the 5.9% recorded for the same period last year. The index tracks the performance of 434 property investments, with a total capital value of €8bn (£7.2bn) as at September 2016. Industrial properties remained the top performing sector in the index with a total return of 3%, income return of 1.7% and capital value growth of 1.3%, supported by an increase in rental value. Office investments recorded a total return of 2.1%, as income stood at 1%, and capital value grew by 1.1%. The Dublin office market was the strongest with a total return of 2.3%. Central Dublin offices posted a total return of 2.1%, with suburban Dublin offices the strongest at 2.6%. A total return of 1.9% was recorded in the retail sector. Shops returned 2.3%, compared to shopping centres and retail warehouses which both saw a return of 1.4%. Central Dublin retail continues to perform well, but shops outside Dublin are also beginning to see stronger returns. Despite the cooling performance, Irish property investments continue to outperform other Irish investment asset classes, with 14.9% total return for 12 months to Q3 compared to equities which stood at -1.% and bonds at 8.3%. Claire Solon, president of SCSI, said: “The Q3 results show that whilst returns are showing some moderation across the board, we believe that Ireland’s investment performance of late is at the cornerstone of our improved economic activity. We can see that the office sector is still the main driver of investment returns and as supply now begins to come available, especially large floor plate offices in our cities, this will hopefully be a significant draw to international companies considering Ireland as an alternative location base following UK’s exit of the EU.” • To send feedback, e-mail shekha.vyas@estatesgazette.com or tweet @ShekhaV or @estatesgazette