Commercial property specialists, CBRE Ireland today released their final bimonthly property market report for 2019.
According to CBRE, despite heightened Brexit noise over the last two months, activity has been brisk across all sectors of the Irish market and at this juncture, CBRE predict good visibility in the pipeline for the year ahead.
Budget 2020 increased the rate of stamp duty on ‘non-residential’ property transactions from 6% to 7.5% from midnight on October 8th – a measure which CBRE say will have implications for property values.
According to the property consultants, several other property-related measures were announced in Budget 2020, which investors are now digesting to determine specific implications for their property portfolios and investment strategies.
The property consultants say that unfortunately, the introduction of unexpected measures by Government has the potential to create reputational risk for Ireland amongst institutional investors.
Another observation from CBRE’s November bimonthly report is that from a delivery perspective, increases in construction price inflation and the cost of adhering to new Near Zero Energy Building (NZEB) regulations from November 1st has added to viability concerns in several sectors of the market over recent months.
According to the most recent Irish investment index from MCSI, total returns in the Irish commercial property market reached 1.3% in the third quarter 2019 with the sector having achieved a total return of 4.5% in the first nine months of 2019.
CBRE say returns will be somewhat negatively impacted in Q4 following the recent increase in stamp duty for non-residential trades from 6% to 7.5%, which came into force last month following Budget 2020.
At this juncture, the expert say investors are taking time to consider the potential impact the recent increase in commercial stamp duty along with other property-related measures announced in the Government’s budget has for their portfolios and investment strategies.
The market is on target to achieve very strong spend in 2019 taking into consideration deals signed year-to-date and the volume of transactions in legals at present including some off-market trades. Investment spend in the first nine months of 2019 was almost €3.3 billion which has potential to reach a new record of €5 billion by year-end, depending on what transactions sign before year-end.
Prime yields across all sectors remain stable as year-end approaches except for retail yields which have experienced some further softening over recent months.
Commenting on the year ahead, Executive Director & Head of Research at CBRE Ireland, Marie Hunt said, "In our last report in September we commented on the particularly large volume of transactions in legals across all sectors of the commercial property market. Over the course of the last two months, some of these transactions have completed and in turn boosted Q3 transaction volumes."
She added, "However, with only two months to year-end, there is still a large volume of transactions due to complete in addition to work to adhere to new Budget changes. There will therefore be a flurry of activity over the coming weeks to get transactions completed by year-end although inevitably some transactions will now carry over into 2020."