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Consumer sentiment will contribute to higher retail rents say Savills

Written by Robert McHugh, on 1st Jul 2015. Posted in General

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Property consultants Savills yesterday claimed that the news that consumer sentiment has reached its highest level since February 2006 will contribute to further growth in retail rents.
 
They believe that there is a modest but statistically significant relationship between sentiment and shopping rents. However, when it comes to the Dublin retail market, they say that house prices are a much better predictor of rental growth.  
 
Director of Research at Savills, Dr. John McCartney said, "Recent research shows that, all else being equal, a pick-up in sentiment flows through to a small uplift in the retail rents index about one year later.

A one percent increase in the CSO House Price Index leads to a 0.3% increase in Grafton St. rents approximately six months later.  This is because people feel richer as the value of their houses rise, which in turn leads them to increase their day-to-day spending.  Further down the road, this gives retailers the confidence to pay higher rents.

Interestingly, the house price effect is much stronger in Dublin than elsewhere in the country, reflecting the higher value of houses in the capital."

Source: www.businessworld.ie

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