Decline in Dublin 4 office values are a feature of latest property index

Published by the MSCI which monitors over €9bn of direct Irish property assets, the index is the authoritative monitor of the performance of Irish commercial property.

It shows that Irish capital values contracted again with a decline of 1.8pc in the quarter. Colm Lauder of Goodbody stockbrokers says while this is modest, nevertheless it is the sharpest quarterly move since Covid-19 impacted Q2-2020.

Office assets saw the sharpest fall, down 2.5pc in the quarter and 3.1pc over 12 months, followed by retail, down 1.3pc in the quarter and 3.3pc over 12 months.

He expresses slight surprise that industrial values rose by 0.8pc in the quarter as it is “a notable divergence from the trend in the UK market where values fell by 8.1pc in the quarter. This brought the Irish sector’s values up 11.2pc over 12 months.

“The results highlight a broadly stable, though lacklustre market performance in the third quarter.

Shopping centre values fell by only 0.2pc in the quarter and the pace of decline continued to slow on Dublin’s high streets as Grafton Street values dipped 2.2pc in the quarter and 5.7pc over 12 months. Henry St values fell 2.9pc in the quarter and 11.1pc over 12 months.

Central Dublin office values fell 2.5pc in the quarter but Dublin 4 offices were weaker – down 4.2pc in the quarter and 7.1pc over 12 months.

Max Reilly of JLL and spokesperson for the Society of Chartered Surveyors Ireland, said the overall trading environment in the third quarter was robust.

Offices yields took a slight hit on yields side rather than income side as rents rose by 0.6pc in the quarter in central Dublin markets.

“It’s a relatively stable quarter and we think the sentiment will be different for Q4 when values are going to come back.

“We need to be careful that some of the overly negative sentiment coming from the UK doesn’t spread to here because their returns and results are showing greater declines than they are here, but that was because there a lot of the assets were more expensive. We have a stronger economy,” he added.