Irish commercial property capital values continue to plunge

The most pronounced value falls, for the fourth consecutive quarter, came in the Retail sector which fell -20.8%. The root cause of the Retail sector’s capital value falls was the pronounced yield impact, at -45.0% over the year, counteracting the
growth in rental values, which rose to 3.4% over 2008 compared to 5.7% the previous year.

All Property rental value movement remained flat over the final quarter and just 2.0% for the year.

In offices, capital values fell -15.8% for the quarter and -34.4% for the year, while falls in Industrials were slightly shallower over Q4, at -15.1%, and -26.2% for the full 12 months.

Marginal insulation was provided in income return which, at the All Property level, returned 1.4% and 4.6% over the year.

The scale of the final two quarter losses of 2008 has pushed down the three-year annualised total returns to -6.1% for Retail; -0.9% for Offices; 2.5% for Industrial while returns of -2.8% were realised on an All Property basis.

IPD Head of Indices Angela Sheahan said: “The market has been braced for further bad news from the final quarter of 2008 so the further steep falls will come as little surprise. However, to surpass the Q3 record capital value falls is another
reminder of the extent to which the Irish market was over-priced prior to last summer.”

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