Total returns from Irish commercial property hit 40.1% in the final quarter of 2014, more than double the 19.3% recorded in the UK, according to the IPD/SCSI Ireland Quarterly Property Index.
The figure represents the highest total returns since the index began and an increase on the 33.2% returns recorded for the second quarter.
MSCI has revealed that total returns on investment hit 40.1% year on year in the fourth quarter of 2014, rising above the previous quarter’s high of 33.2%.
Offices continued to lead the market, returning 8.7% quarter on quarter and 45.3% year on year.
As in the previous quarter, the high returns for Irish offices stemmed mainly from a strong occupier market, with rental value growing 6.9% in the quarter.
Irish retail properties also performed well, with returns reaching 8.8% over the quarter and 34.7% over the year as a whole.
Irish real estate outperformed Irish bonds, which returned 23.1% over the last 12 months (JP-Morgan 7-10 yr) and Irish equities, which returned 16.9% (ISEQ Equity Index).
Colm Lauder, senior associate, MSCI, said: “The IPD/SCSI Quarterly Index shows that Q4 2014 is the first time that we have recorded a total return for Irish commercial property that exceeds the 40% mark.
“The performance of Irish property has increased steadily over 2014 to reach this record level, largely based on the success of the office market and it is sure to lead to conversations of whether a bubble has re-occurred in Ireland.
“Both rents and yields are still below peak time highs. Additionally, the moves by the ECB this week to inject cash into the Eurozone could possibly result in more money going into property in Ireland with potential increased demand from overseas buyers attracted by the weakened Euro.”