Ireland bucks trend with strong performance

WITH the commercial property market in most European cities still in the doldrums, Ireland has again bucked the trend by turning in a strong performance in the first six months of the year.

A new report shows that while Dublin office rents rose by 3.1 per cent and retail rents advanced by 6.6 per cent, all other regions continued to experience serious difficulties with the exception of the UK and Scandinavia.

Although office rents appear to have stabilised in most European cities, both retail and industrial rents are still in a free fall, according to the Oncor European Property Bulletin.

Oncor's Irish representative, Ian French of Hamilton Osborne King, says that with the continued strength of the Irish market, "it seems likely that we would continue to be among the leaders in Europe in terms of rental growth".

The Oncor report, which deals with 60 European cities, shows that 14 of the smaller cities - including Dublin - recorded rent increases. Scandinavia, Britain and Ireland recorded the most significant recovery in all market sectors since the early 1990s.

Overall, rents fell by up to 10 per cent in southern and eastern European cities. In northern and western European centres, rents rose by 4 per cent to 10 per cent. While office rents in most cities did better in the first half of the year, the report says office yields throughout Europe have shown relatively little movement since 1995.

An analysis of the three most important office centres in Europe - London, Frankfurt and Paris - confirms that rents in the British capital are now firmly back on track after rising steadily since 1993. By comparison, rents in Frankfurt and Paris have drifted downwards since the beginning of the decade. Ian French says that by modifying the fall in the early years, Paris and Frankfurt may have only served to prolong the decline in rents.

The Oncor study ranks Moscow as the most expensive city for office space mainly due to the shortage of modern accommodation. At the other end of the scale, Seville is ranked the cheapest.

Dublin rents put the city 22 out of 60.

Shop and industrial rents in general have fallen continuously across Europe during the first half of the year - again with only Scandinavia, Britain and Ireland breaking the trend. The stronger retail rents in London are being attributed to the falling value of sterling, which has generated extra tourist spending.

Another interesting trend to emerge from the Oncor study is that industrial rents are strengthening in Germany and the Benelux countries. Seven of the 19 cities in these areas show rental increases and in no instances did rents decline.