CONFIRMATION of the high return last year from the Irish property investment market is provided in the end-of-year figures from the Investment Property Databank (IPD). The all-property return grew by 18.9 per cent, though development expenditure and transactions lowered that figure by 0.4 per cent.

For 1996 as a whole, industrials achieved a return of 20.6 per cent, offices 19.3 per cent, and retails 18.2 per cent.

The market continued to out-perform Britain, which recorded a return of 9.4 per cent for the year. Within Ireland, property did better than gilts, which had a return of 10.6 per cent, but remained below equities, which hit 26.1 per cent.

The overall findings on Irish property are broadly in line with those from Jones Lang Wootton, which recently reported returns of just over 19 per cent for the year, the highest level in the current cycle.

IPD found the property market ended 1996 with a flurry, recording a return of 6.2 per cent in the final quarter. Rental values rose by 3.5 per cent - an increase of 2.2 percentage points on the previous quarter. In addition, yields fell by 0.11 per cent, contributing to a capital growth of 4.2 per cent, almost double the growth for the third quarter.

Offices, recording a return of 6.7 per cent, were the best performing sector of the market over the final quarter of the year. Capital growth of 4.7 per cent derived from a 3.3 per cent uplift in rental values and a 0.14 percentage point reduction in yields. By the end of 1996, the office yield had fallen to an all-time low of 7.31 per cent.

Industrials slipped into second place with a total return of 5.9 per cent for the last quarter. Rental value growth of 1.8 per cent. matched the rate for the third quarter, while capital values were enhanced by a 0.15 percentage point fall in yields.

Relatively high income return and strong capital growth ensured industrials remained the best-performing sector of the market during 1996 with a return of 20.6 per cent.

After a strong performance in the third quarter, the retail sector recorded a return of 5.6 per cent over the last three months of 1996. Although this was up on the September figure, the sector ranked behind offices and industrials - in contrast to its top-performing slot in the third quarter. Retail values rose by 3.6 per cent, with only a marginal drop in yields - an improvement that was primarily due to a 4.3 cent increase in rental values.

The IPD index which is compiled in conjunction with the Irish Society of Chartered Surveyors, is based on a sample of 281 properties with a combined market value of £915 million.