Since the beginning of the year only €392 million of Irish investment deals were signed, according to a new report from CB Richard Ellis Ireland. This compares with €1.9 billion in the same period in 2007.
Irish investment in UK property has also plunged. There were €795 million transactions in the first six months of 2008 compared with €5.5 billion in the UK in 2007.
Despite the downturn CB Richard Ellis Ireland, the commercial property consultants, said that while there has been little transactional evidence to indicate yield movements in the Irish market, it believes that yields in the Irish commercial property market effectively increased across the board by at least 100 basis points in all sectors in the first six months of 2008.
However its experts point out that these yields will have to move further if deals are to be agreed between now and the end of the year. CBRE says that yields may have to increase by another 50 to 75 basis points to attract buyers. This could bring prime retail yields to between 4.25 and 4.50%; prime office yields to 5.2 to 5.50% and prime industrial yields between 6.25 and 6.50%.
According to the report many Irish investors are prepared to look at investment opportunities in the UK market but only where there is real value on offer. Average yields in most sectors are now trending close to their long-term average.
It predicts that until such time as investors see yields stabilising and liquidity improving, transactions will be thin on the ground.
