‘Very challenging 2009’ will slow the Irish property market until 2010 predicts CB Richard Ellis’s annual Outlook report.
‘With sentiment and economic conditions weak and bank funding severely restricted, it will likely be 2010 before conditions in the Irish property market improve to any significant degree,’ CBRE has warned.
Looking back on the past year, the report reflected that on average, the value of prime development sites in Dublin fell by at least 40% during 2008, with much more dramatic declines seen in secondary sites and provincial land banks.
It found that the occupier markets performed relatively well in the first half of 2008 but performance slowed in the latter half of the year. As a result, tenants will be in a strong bargaining position to negotiate favourable terms and conditions, so there is potential for rents in some schemes to come under pressure over the course of 2009 the report said,
CB Richard Ellis found that last year’s Dublin pub sales were down 50% compared to the previous year. Just six properties sold and two properties leased during the year.
The trend was exacerbated by alternative development values paid for pub properties during the height of the boom being no longer achievable.
The report also warns that the hotel sector will also face big challenges over the next 12 months.
However, there is a little light at the end of the tunnel.
The report said that because the UK investment market was the first property market in Europe to see a significant fall off in values, it is also likely to be the first to stabilise - although values are likely to overshoot before stabilising.
Also, for those that remain cash-rich there are bargains to be had.
‘With many investors and developers under financial pressure, there may be an increase in distressed sales this year although it is impossible to say if this will result in prime investment properties being offered for sale.
'Nevertheless, there are likely to be some excellent buying opportunities (both on and off-market) for those in a position to purchase,’ the report said.
Guy Hollis, MD at CBRE concluded: ‘The only positive is that unlike other previous downturns in the Irish commercial property market, the development community have been extremely prudent and have essentially curtailed a significant proportion of schemes that would otherwise have been developed and contributed to oversupply.
‘As we look to the 12 months ahead, there are positives emerging, not least the continued reductions in interest rates which will improve confidence and stimulate some activity.
‘Property values haven now fallen to levels which will undoubtedly give rise to some excellent buying opportunities during 2009. However, no-one is denying that the property market will, for the most part, remain very challenging over the course of the next 12 months and that it will likely be 2010 before we are through the worst of this unprecedented downturn.’