Market turnover to reach €500m in 2012 - up from €25m in 2011

ESTATE AGENT Savills has forecast that turnover in the commercial property market which dropped to €25 million in 2011 should reach €500 million this year as a result of concessions announced in the December budget and an increased volume of stock going for sale.

Savills latest report on the property market said that apart from the significance of the individual measures included in the budget, international investors saw this package as a commitment from the Government to get the property market moving again.

This coupled with other factors, such as historically high initial yields, were making commercial property investment in Ireland more attractive.

Since the December budget there had been three significant deals agreed with institutions varying in lot sizes from €27 million to €43 million.

These were the most significant transactions in the last four years. Overall there was now price transparency for prime assets – by location, length of income and quality of covenant.

The Savills report said the increased demand from core/core-plus, private equity and opportunity investors was expected to be matched by an increased amount of stock coming to the market.

The secondary market was more difficult but if the length of income and quality of a covenant was strong enough, investors would look at the product, more as a financial play.

Meanwhile, the latest bi-monthly report from CBRE also said there had been a notable improvement in the volume of commercial properties being offered for sale in all sectors in recent months.

Where pricing was realistic, the property consultants said that sales were occurring.

However, CBRE said the biggest frustration was the length of time it was taking to get transactions closed and signed, a factor they attributed to the “forensic due diligence” being undertaken at present.

The agency said that prime rents and yields in all sectors of the Irish market were now clearly showing signs of stabilising after a number of difficult years.

CBRE said that although there was an increasing volume of investment product coming to the market, investors remained frustrated by the scarcity of prime office and retail opportunities being publicly offered for sale.