TOTAL RETURNS from the Irish commercial property market in the first quarter of this year have avoided negative territory for the first time since Q1 in 2010, posting a 0 per cent result

The neutral return reported in the SCS/IPD index can be traced to a slowdown in capital appreciation. While capital movement in Q1 remained negative at -2.3 per cent, this was an improvement on the -3.3 per cent posted in the last quarter of 2010.

Two weeks ago a separate study by Jones Lang LaSalle showed that overall returns increased by 0.9 per cent in the first three months of the year.

IPD said that falling rents continued to be the main undercurrent of capital decline but a slowing in the first quarter, at -3.4 per cent, was up 150 basis points from the -4.9 per cent recorded in Q4 2010. This had led to the lower capital depreciation.

Rental values have now fallen a cumulative -39.5 per cent since December 2008. Yield impact, which measures the influence yield movements have on capital values, remained negligible at -0.2 per cent for the first quarter.

While offices and industrials managed to edge into positive territory with returns of 0.5 per cent and 0.3 per cent, respectively, retails remained off the pace with a negative -0.6 per cent, their values were down -2.7 per cent over the quarter.

All three sectors saw a reduction in levels of rental value decline. Slowdown was most marked in the retail sector, down from -4.9 per cent to -2.9 per cent. By comparison office rental values fell by -3.6 per cent and industrials by -4.6 per cent.

Phil Tily, IPD director for the UK and Ireland, said 2011 had seen a moderate easing in the negative factors affecting Irish commercial property but continuing economic uncertainty was stifling any full blown recovery in the market.

“The moderate easing in rental value decline has led to a slowing in the rate of capital depreciation in the market. While there is still a long way to go for Irish property, it is encouraging to pick up on improving themes.”