Commerical property market to polarise
The Irish commercial property market is likely to see greater polarisation in 2013, as demand rises for prime property in key locations, while secondary and provincial properties take longer to unwind.
In its outlook for 2013, commercial property consultant CBRE is bullish about the prospects for prime property, considering the weight of demand from a range of international investors for opportunities in the Irish market.
“The prospects for prime property are considerably better than secondary with increased polarisation likely to be a key trend in 2013,” said Marie Hunt, executive director and head of research at CBRE, adding that the sector is moving into a “recovery phase”.
According to CBRE, international investors will continue to focus their attention on prime office, retail and residential portfolio opportunities, primarily those in core locations in Dublin. This has the potential to generate some further yield compression in the office and retail sectors during 2013, despite the fact that short term rental growth projections remain relatively flat.
Domestic investors on the other hand will be the most dominant purchasers of secondary and provincial investments, some of which are likely to continue to experience “further outward yield shift” over the course of 2013 considering the likely depth of cash buyers.
CBRE also expects more loan sales activity in 2013, as banks continue to de-leverage their property holdings, while the disposal of some of the underlying securities that were sold by way of loan sales during 2012, might also be on the cards.