Ireland’s commercial property market is entering a period of modest recovery with rents and capital values expected to rise in 2026, according to the Society of Chartered Surveyors Ireland (SCSI).
In its latest review of the sector, the SCSI, however, warned of the possible inflationary effects of ongoing violence in the Middle East, which has already triggered a spike in energy prices.
Investment in commercial property fell to a decade low in 2023 as higher interest rates and increased remote working dampened investor appetite.
But the SCSI said there was now a “cautious recovery” under way across all three main commercial property asset types: office, industrial and retail.
READ MORE
It predicted average capital values for prime industrial assets will rise by 4 per cent in 2026, while rents will rise by 4.4 per cent.
Office capital values and rents are expected to increase by 2.4 per cent and 2.9 per cent respectively, while retail capital and rental values are forecast to increase by 1.2 per cent and 1.1 per cent respectively.
“Both occupier and investor expectations have strengthened relative to previous years, supported by a modest recovery in take-up, clearer pricing signals, and more stable credit conditions,” chair of SCSI’s commercial agency group Bernadine Hogan said.
“Respondents are reporting increasing inquiry levels and a notable improvement in investor confidence. For example, we anticipate that a number of larger office transactions will materialise later in the year,” she said.
The society’s report, which is partly based on surveyor responses, said student housing remains one of the stronger-performing sectors, with rental growth projected at 3.2 per cent and capital values expected to rise by 3.1 per cent “supported by resilient demand and structurally constrained supply”.
Data centres were also said to be demonstrating “comparatively robust momentum”, with rents forecast to increase by 3.5 per cent and capital values by 3.2 per cent on average, “underpinned by ongoing expansion in the digital economy and sustained occupier demand”.
Aged care facilities are expected to deliver steady, albeit more moderate, performance.
The SCSI said the majority of businesses contacted anticipate stability in their office space requirements over the next two years with 55 per cent expecting no reduction in their current office footprint.
SCSI said the figures suggests that while a sizeable minority of agents continue to anticipate some degree of downsizing, sentiment has shifted towards greater stability in occupier requirements.
“While any signs of a recovery are most welcome, Ireland like the rest of the world is not immune to the impact of persistent geopolitical instability and international conflict,” SCSI president Gerard O’Toole said.
“In that context, the potential economic impact of the unfolding situation in the Middle East is naturally concerning.
“While the situation is fluid and the timeline is as yet uncertain, there is no doubt a protracted war could lead to a period of sustained higher energy costs and an unwelcome increase in construction inflation, which in recent years has returned to more moderate levels,” he said.
