Up to €700m of commercial property still on the market

ALMOST 100 commercial properties with a value between €600 million and €700 million are on the Irish market, according to Savills HOK.

Despite the knock-on effects of the international credit squeeze, about 25 of the properties with an overall value of over €300 million are at the "deal agreed" stage.

Joan Henry, head of research at Savills HOK, says that the slow pace of sales reflects the considerable changes in investment market conditions over the last 12 months.

Continued bad news from the US - coupled with persistent tight lending conditions and a general slowdown in the domestic economy - were key factors compounding what could only be described as "negative, cautious sentiment".

Savills HOK is predicting that the tone of the market place will remain cautious, as there is little to indicate that the current commercial lending environment will change over the coming months. Banks had tightened lending requirements considerably and had increased margins "which has affected demand (and is expected to continue to)".

Once again, investors with cash were in a very good position to do deals at what could be considered to be very competitive prices.

Dealing with the office market, Savills HOK said there were significant new developments under way in Sandyford with one building of over 16,500sq m (177,604sq ft) due for completion this year and another 14-storey block of almost 13,500sq m (145,313sq ft) on course to be finished in 2009.

Despite the hardening of city centre rents over the last few years, rents in Sandyford had not risen significantly during the same time span.

An example was the €275 per sq m (€25.5 per sq ft) being quoted for The Sentinel in Sandyford. "The gap between the prime city and prime suburban rents has widened, if anything, thus making the suburbs more attractive," according to Henry.

Moving on to the new homes market, the agency's Property Watch report says that given the level of demand for new homes, triggered by price reductions, they took the view that prices of units "are near the bottom". That said, they do not expect any upward price pressure for the rest of the year. They expected buyers to benefit from further increases in affordability as the year goes on with increasing pressure on the European Central Bank to result in interest rate cuts, by mid-year, of 0.5 per cent.