Commercial property experts tip ‘market stability’ in 2018

COMMERCIAL property professionals believe growth will stabilise in the sector this year after years of substantial increases in rents and prices, according to a new survey.

Around 90pc of respondents to Origin Capital’s latest sentiment tracker for the sector thought rents and prices would stay the same or increase slightly in the next three months.

“The majority of respondents believe that the period of exceptional growth in CRE [Commercial Real Estate] prices and rents has come to an end, bringing some much-needed stability to the sector,” said Ross Metcalfe, chief executive of Origin which provides debt finance for commercial property deals.

“Market stability helps to bring all parties to a transaction, including lenders, who can more accurately determine the repayment capacity of a borrower and gauge the appropriate level of risk involved.”

Around 85pc of respondents thought planning process delays are affecting developments in the sector, while 80pc said the level of funding provided by the banks was not enough to meet the needs of the market.

More than two-thirds believed new funders were likely to enter the market in 2018.

On Brexit, more than half believed prices in the sector were increasing moderately due to the potential relocation of UK-based entities to Ireland.

Commercial property consultants CBRE Ireland said 2017 was a record year for take-up in the Dublin office market. “In total, more than 320,000 sq m of office transactions were recorded in the capital during 2017 in more than 250 individual transactions — more than a third higher than the volume of take-up achieved in Dublin at the peak of the market in 2007,” said Marie Hunt, inset, executive director and head of research at CBRE Ireland.

“Take-up in 2017 was boosted by considerable expansion activity on behalf of technology companies and included a number of large pre-lettings, some of which were Brexit-related.

“A significant proportion of office stock due for delivery in 2018 has already been pre-let, which is very encouraging ... approximately 220,000 sq m of new office stock was delivered in Dublin during 2017 while take-up has been 100,000 sq m higher in the 12-month period.”

Some of the largest takeups included 34,554 sq m by Microsoft in Sandyford, and a 19,641 sq m pre-let at Capital Dock in Dublin’s Docklands to Indeed.