In spite of all the hype about Dublin's Grafton Street, unit shops along the city's main shopping thoroughfare were the poorest performing property type last year for the investors who own them. This was one of the surprises in the annual results of the Irish Property Index, which were presented at a reception in Dublin yesterday organised by the Society of Chartered Surveyors and the Investment Property Databank.
The Grafton Street shops showed a return of 16.8 per cent in 1999. IPD said yields in this sector of the market have bottomed out at 3.9 per cent.
Other poor performers were provincial retails, which showed a return of 21.6 per cent, a long way down on the previous year. In Dublin, the Henry Street/Mary Street area produced returns of 21.4 per cent while suburban Dublin finished the year at 24.6 per cent.
At the other extreme, central Dublin offices achieved a 37.8 per cent rate of return for the year. A generally strong performance throughout the Dublin office sector ensured that the market returns remained in excess of 30 per cent for a second successive year.
Moreover, these office blocks accounted for more than 60 per cent of the total portfolio value. Office returns in suburban Dublin came in at 32.3 per cent, not far ahead of the 30.3 per cent recorded in the provinces.
A separate analysis by age showed that older properties generally earned the highest rates of return in 1999. This was particularly evident within the office sector, where properties built before 1970 have claimed the better rates of return throughout the last four years.
On the investment side, Phil Tiley of IPD reported that 1999 was a record year in cash terms. However, a sharp rise in the level of selling meant that net investment, though still positive, amounted to just 1.5 per cent of the total portfolio value.
Very little new money was invested in the retail market, reflecting the shortage of available stock.
In direct contrast, activity levels were especially high in the central Dublin office market where the amount of buying and selling cancelled one another out.
The overall returns last year of 31.1 per cent were slightly down on 1998 but they maintained the exceptional bull run by the Irish market. Rental growth remained strong at 14 per cent.
Despite the slight slippage last year, the overall returns exceeded most peoples expectations and was the third highest in the IPD index of the Irish market over 15 years.
It also puts Irish property in a different league when compared with other European markets.
