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Rents forecast to rise further in a "buoyant commercial property market"

Written by Robert McHugh, on 13th Jan 2017. Posted in Property

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A new report by Cushman & Wakefield Research has found 2016 was a very buoyant year for the Irish commercial property market.
 
Investment in the Irish commercial property market rose 21% year on year to reach an impressive €4.46 billion.  Furthermore, supported by strong employment growth and FDI investment, more than 260,000 sq m of accommodation was taken up in the Dublin office market during the year.  

Notably, this is 16% higher than 2015 levels and 45% ahead of the 10-year average.
 
Activity levels in the opening six months of the year were particularly strong, however, dampening somewhat in the third quarter leading to some fears of a Brexit impact. These now appear unfounded with a total of €1.3 billion transacting in the final three months of the year alone.
 
Prime Dublin rents rose by 4.6% during 2016, to stand at €619 per sq. m by year end. Cushman & Wakefield forecast that rents will rise to €646 per sq. m during 2017.
 
Furtermore, 2016 was undoubtedly a year for the retail investment market, representing €2.26 billion or 51% of total investment spend during the twelve months. The largest transaction of the year was the sale of Blanchardstown Town Centre. Acquired by Blackstone for €950 million, this is the largest single asset sale in the history of the state. 
 
Cushman & Wakefield believe the year ahead looks very promising for the Irish market. Total investment transactions are anticipated to be in the order of €3 billion, with a strong volume of re-trades from early entrants into the market.

Furthermore, the positive outlook for economic and employment growth bodes well for occupier demand in the office market, most notably in Dublin but also in the other regional centres.
 
Commenting on last year, Chief Economist at Cushman & Wakefield, Marian Finnegan said, "2016 was a very resilient year for Irish commercial property. Overall investment volumes were incredibly strong with notably €3 billion invested directly by US and European investors. It was also a significant year for the Dublin office market, both in terms of occupation levels and in terms of development. Just over 31,000 sq. m of office accommodation was delivered in Dublin during the year, which was the first wave of office development in the city since 2011." 

She added, "Notably, there is an additional 373,000 sq. m of office space under construction in Dublin today, of which 230,000 sq. m is expected to be completed by end 2017. This is critically important to satisfy demand pressure and stabilise rental growth."

Source: www.businessworld.ie

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