Returns up 8.7% so far in 2007

Market ResearchOverall returns from commercial property continued to show steady growth in the third quarter with a 2.9 per cent rise in the three months and a 14 per cent rise in the year to the end of September, according to the Jones Lang LaSalle Irish property index.

"The third quarter growth was exactly the same as that seen in the second quarter of this year and is best characterised as steady and moderate," says Dr Clare Eriksson, head of research at the agency.

The index, the longest running measure of the Irish commercial property market, found that total returns were up by 8.7 per cent in the year to date, with capital values marginally ahead of the growth rate for rental values. Overall capital values increased by 1.9 per cent in the quarter and by 5.5 per cent in the Q1 to Q3 period of 2007.

The industrial sector had the highest quarterly capital value increase of 2.3 per cent while achieving growth of 11.3 per cent in the year to September 2007. The capital value rise of the retail sector marginally lagged that of industrial in Q3 2007 at 2.1 per cent while the office sector recorded an increase of 1.7 per cent for the same period. In the nine months to September 2007, the retail and office sectors had capital value growth of 4.9 per cent and 6 per cent respectively.

In Q3 2007 overall rental values in the index increased by 1.4 per cent and by 3.9 per cent over the first nine months of the year. Both the office and retail sectors had rental growth of 1.6 per cent in Q3 2007 while industrial rents remained unchanged for the same period.

During Q1 to Q3 2007 the office sector had the highest performing rental increase at 5.3 per cent. This compares to rental rises of 2.9 per cent for retail property and 1 per cent for industrial in the same period.

Income levels remained virtually unchanged in the quarter with a 0.3 per cent rise though they have risen by 2.2 per cent in the year to September 2007. Current income yields on property now average 3.5 per cent. This breaks down further to 5.1 per cent on industrial property, 3.7 per cent for offices and 2.9 per cent for retail.