Survey finds rents set to fall again

Rents outside the retail sector will continue to fall in 2004, according to a survey of Irish estate agents.

However, the Irish Auctioneers and Valuers Institute (IAVI) expects a continued rise in the value of property, especially in the residential sector.

A survey of IAVI members predicts that house prices nationally will increase by around 7 per cent this year, down slightly on the 9-10 per cent seen in 2003.

IAVI chief executive Mr Aidan O'Hogan said reduced demand from investors and increasing supply in the key Dublin market would contribute to a moderation of the rate of price increases.

However, he added that "overall demand remains strong, especially from first-time buyers, and there is still sufficient investor presence to keep the market active".

Rents in the residential sector have fallen in each of the past two years and the IAVI anticipates the trend will continue in 2004, with an average decline of 3 per cent. However, this masks variations according to location and property type.

The IAVI said that, despite three years of decline, rents will remain at reasonably strong levels. It blames recent volatility in the sector on the "anti-investment measures" introduced by the Government in the late 1990s.

The IAVI also foresees slippage in rents in the office and industrial sectors this year.

The retail sector remains the star of the commercial market. Dublin's Grafton Street saw rents climb by a quarter last year to record levels of €5,750 per sq m and, overall, the IAVI sees the sector returning rent increases of 7 per cent in 2004.

The value of retail property is also expected to rise by around 6 per cent.

An indicator of the optimism of the construction sector was the 7 per cent rise in the price paid for retail development sites in Dublin last year. Residential site values in the capital also rose strongly, up 11 per cent and slightly ahead of the rest of the State.

Within the commercial market, pubs had a notably poor year in 2003, with campaigns against drink driving and the penalty point system seen as contributing to a fall in the value of rural licensed premises in Munster and Leinster, and in rural roadhouses.

Within the office sector, high vacancy levels continue to be a problem in Dublin, where rents fell by 4.5 per cent last year. Suburban premises were particularly vulnerable, although even at the higher end, such as Georgian premises, rents softened by 9 per cent.

IAVI members see little movement in property values in the office and industrial sectors.

There was also scepticism in the survey over the Government's announced policy of decentralisation. While 73 per cent of respondents were confident the exodus of the civil service from Dublin would take place, less than 29 per cent believed it would happen within the Government's three-year timetable.

Despite the mixed picture, estate agents expect to increase the numbers they employ this year.