Irish office sector delivers record performance

The IFSC, Dublin Photo: William Murphy

Irish offices have delivered a record performance in the second quarter of 2015, as the sector continues to lead the investment market.

The latest IPD/SCSI Ireland Quarterly Property Index shows that total returns from Irish investment property hit 6.3 per cent in the three months to June 2015, above the 4.3 per cent in the first three months of 2015. The office market, though, outperformed the average, returning 7.4 per cent in Q2 2015 and 37.7 per cent year-on-year - up from 33 per cent in 2014.

The growth was driven by a strong occupier market, according to the report, with rental value growth at 6.1 per cent in Q2 2015, far higher than for the other main sectors. Indeed, 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.

Colm Lauder, Senior Associate, MSCI, comments: "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. The prime retail sector recorded a significant pickup in rental performance during the second quarter, with
market rents climbing by 4.4 per cent on Grafton Street as confidence returns to the retail trade. Values on Ireland’s leading high street have grown by 49 per cent in the last 24 months, although this still leaves values 62 per cent off the 2007 peak."