Regions outside Dublin and Cork most likely to feel stamp-duty hike

Investors spent €529m buying commercial property in third quarter of 2017

Apple’s offices on Half Moon Street in Cork: property dealers Cushman & Wakefield have predicted that properties in Dublin and Cork would continue to attract investment

Apple’s offices on Half Moon Street in Cork: property dealers Cushman & Wakefield have predicted that properties in Dublin and Cork would continue to attract investment

 

The Government’s decision to treble stamp duty on commercial property to 6 per cent will most likely hit areas outside Dublin and Cork, according to one realestate dealer.

Minister for Finance Paschal Donohoe increased the duty – paid by buyers – to 6 per cent from 2 per cent in the budget earlier this month, reversing a 2011 reduction in the charge.

Property dealers Cushman & Wakefield predicted on Monday that the move would hit values in the short term.

However, the firm added that properties in Dublin and Cork would continue to attract investment, while the immediate impact could be experienced most in “regional Ireland”.

Cushman’s chief economist, Marian Finnegan, suggested that capital gains tax changes introduced in the budget could boost the amount of commercial property coming up for sale.

The Government is cutting an exemption period for capital gains tax to four years from seven years.

This alters a measure introduced in 2011 that allowed investors to avoid capital gains tax on commercial property if they held an asset for seven years or more after buying it.

Cushman & Wakefield said on the Monday that investors spent €529 million on commercial property in the Republic during the three months that ended on September 30th.

The total spent since the beginning of the year now stands at €1.3 billion, the firm added.

Offices and shops

Of the 145 deals recorded to date this year, three quarters of them ranged between €1 million and €10 million. Offices and shops were most popular with investors.

The firm said there was a growing number of “off-market” deals, where buyers approach owners directly and buy property without it being offered for sale publicly.

Such transactions accounted for €272 million, or 21 per cent, of the total business done so far this year.

“This increase in off-market deals is notable, it represents a twofold increase on the same period last year,” Ms Finnegan said.

Cushman & Wakefield blamed a lack of supply for the trend. The firm said this had prompted buyers to look beyond what was available on the market.