The Irish property investment market is at a ‘virtual standstill’ ahead of the autumn selling season with investment totals for the first half of the year down significantly from previous years, said CB Richard Ellis today.
In its Irish Capital Markets Market View report for the third quarter of the year it said that a ‘mere’ €392m (£312m) of investment deals in Ireland were completed in the first half of the year. in 2007 around €1.9bn (£1.5bn) of domestic investment deals took place in Ireland.
CBRE said there was only ‘limited appetite’ for properties and potential buyers are having difficulty securing debt-financing and potential sellers were slow to accept the decline in property values.
Guy Hollis, managing director at CB Richard Ellis Ireland, said: ‘Gauging current investor sentiment, it is likely that yields will have to move further if deals are to be agreed between now and the end of the year. We believe that yields may have to increase by another 50 to 75 basis points to attract buyers.
This could bring prime retail yields in the Irish market to 4.25% - 4.5%; prime office yields to 5.25% - 5.5% and prime industrial yields to 6.25% - 6.5%.
The reality is that there is a weight of money building up for investment in property in Ireland, but not at current pricing. The sooner that yields re-adjust, the sooner liquidity will return.’
CBRE said: ‘Unlike the rest of Europe 100% of property investment activity in Ireland in recent years has been domestic, with overseas investors put off by the exorbitant 9% rate of stamp duty applying here.
'This issue urgently needs to be addressed by Government in the forthcoming Budget if private investors and sovereign wealth funds that are active in other markets are to be encouraged to invest in Ireland.’
However it said the occupier sectors of the property market in Ireland remain relatively healthy which ‘bodes well for a return to growth in the medium term’.