Tag Archives: irish
Investment in Irish office property market sees record performance
Total returns from investment property in Ireland hit 6.3% in the second quarter of 2015, rising above the 4.3% returned in the first quarter of the year, new data shows. Offices continued to lead the market, returning 7.4% in the last quarter, and 37.7% year on year compared with 33.0% in 2014, another record performance figure for the office sector, according to the figures from the IPD/SCSI quarterly property index. Following a slight dip in the previous quarter, the higher returns for Irish offices stemmed mainly from a strong occupier market, with rental value growth at 6.1% in the second quarter far higher than for the other main sectors. The index report also says that rental growth is now firmly established as the key driver of office returns, taking over from the re-pricing that drove the office market recovery in its early stages, when investor confidence began to return. The 12 month return for Irish commercial property of 33.7% to the end of June 2015 was more than double that for the UK over the same period which was 16.7% according to the IPD UK monthly property index. ‘The index shows that it has once again been a very strong quarter for Irish office investments. That said, we have also seen an improvement in the industrial sector, with total returns rising 250 basis points over the course of the second quarter of 2015,’ said Colm Lauder, MSCI senior associate. ‘The prime retail sector recorded a significant pickup in rental performance during the second quarter, with market rents climbing by 4.4% on Grafton Street as confidence returns to the retail trade. Values on Ireland’s leading high street have grown by 49% in the last 24 months, although this still leaves values 62% off the 2007 peak,’ he explained. ‘Investment pricing on Grafton Street showed an equivalent yield of 4.5% at the end of June, a long way off the 2.6% level achieved during the boom years,’ he added. According to Pauline Daly, of the Society of Chartered Surveyors Ireland (SCSI) said that the increase in returns in the second quarter reflects strong activity levels in the market across all subsectors. ‘An interesting trend has been the change in transaction type in the second quarter from the large portfolio sales in the first quarter to a larger number of individual asset sales in the second quarter,’ she explained. ‘We are also seeing more investment spread to the regions, particularly in Munster, which is good news from a competitiveness perspective and a wider pool of investors involved in the market which is likely to ensure liquidity and continued growth in investment volumes for the rest of the year,’ she added. Continue reading
Sales and rental markets in prime central London feeling election effect
Both property prices and the rental markets in prime central London are being affected by the uncertainty surrounding the next UK government as the election remains too close to call just hours before polling opens. Prices in this sector rose by 0.3% in April and have been broadly flat in recent months with annual growth dipping to 2.8% in April, according to the latest report from real estate firm Knight Frank. Indeed, it is the lowest rate since November 2009, a period when the market had begun to rebound following the collapse of Lehman Brothers the previous year. After an exceptionally strong run of growth that saw prime central London property cement its global reputation as a safe investment, political uncertainty has now replaced economic uncertainty, according to Knight Frank associate Tom Bill. ‘During an election campaign where the opinion polls remain deadlocked and a clear cut outcome is not immediately guaranteed, some sellers are waiting for more clarity before acting, which has led to pent-up demand,’ he said. He pointed out, however, that irrespective of the outcome, a growing number of vendors are lining up properties for sale once the election is over, which suggests there will be a bounce in transaction levels. He also explained that in the sales market demand remains robust, primarily on the back of a strengthening UK economy but also from overseas buyers who view London as an attractive place to live given the shifting nature of geo-political uncertainty around the world. ‘Tight supply and strong demand has in some instances led to a stand-off between buyers and sellers in the expectation that more stock will appear after the election. As a result, viewings were 14% lower in the year to March 2015 than the previous year,’ said Bill. ‘While there is less political uncertainty in lower price brackets and price growth broadly remains stronger below £2 million, there remains strong appetite for higher value property. Some deals have been done as sellers have adjusted asking prices down to reflect the fact growth has cooled across the various price bands,’ he explained. ‘It is also worth noting that annual price growth in prime central London has been slowing for three years, which means that some degree of political uncertainty is already priced in,’ he added. According to Bill, over the last year, the prime central London lettings market has benefited from uncertainty in the sales market surrounding the outcome of the general election and a number of buyers have opted to rent until the outcome is clear, though demand has been more broadly driven by the strengthening UK economy. ‘As the election moves closer, this trend has become less marked as a universal sense of hesitation permeates both the lettings and sales markets. Some prospective tenants have been holding out for the election result before deciding whether to rent or buy which, combined with the Easter holiday, led to fairly subdued activity across many markets in April after a strong… Continue reading
US pending home sales up 1.1% in March, but with regional variations
Pending home sales in the United States continued upwards in March and reached their highest level since June 2013, according to the latest index figures. The Pending Home Sales Index, a forward looking indicator based on contracts signed, from the National Association of Realtors climbed 1.1% to 108.6 in March from an upward revision of 107.4 in February and is now 11.1% above March 2014. The index has now increased year on year for seven consecutive months and is at its highest level since June 2013. NAR chief economist Lawrence Yun said that contract signings picked up in March as more buyers than usual entered this year's competitive spring market. ‘Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year, While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long term home owners,’ he explained. Yun expects a gradual improvement in home sales in the months ahead but says insufficient supply and accelerating prices could be a drawback to sales reaching their full potential. ‘Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer. This in turn has pushed home prices to unhealthy levels, nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability,’ he added. A breakdown of the figures shows there is considerable regional variation. The index fell 1.5% in the Northeast fell, the fourth month in a row it has done so but is still 0.6% above a year ago. In the Midwest the index fell 2.5% but is 11.3% above March 2014. Pending home sales in the South increased 4% and are 12.4% above last March while the index in the West rose 1.7% in March and is now 15.6% above a year ago. Continue reading
