Market returns up by 10.5% in 2017

Overall returns from the Irish commercial property market reached 10.5 per cent in 2017, with 1.4 per cent of the growth coming in the last three months of the year.

The findings in the JLL Irish Property Index showed that capital values over the year increased by 5.2 per cent and by 0.2 per cent in the final three months. The year-on-year growth was predominantly led by the office sector, which recorded the strongest increase of 8.4 per cent.

The latest results show that the overall capital value index has increased by 87.6 per cent since the market crashed but still remains 38.4 per cent lower than at the peak in the third quarter of 2007.

Though overall income increased by 3.4 per cent in the final quarter of 2017, it decreased across the portfolio by 1.4 per cent – largely because of vacancies in portfolio properties during the year. Overall rental values across the entire index increased by 2.8 per cent in the final three months and by 7.3 per cent over the full year. Retail showed the best uplift during the year of 8.4 per cent.

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Hannah Dwyer, head of research at JLL, said the index continued to show stability over 2017 despite the 200 per cent increase in stamp duty included in the 2018 budget, which led to an immediate reduction of 3.7 per cent in net values and virtually cancelled out capital growth in the quarter.

Ms Dwyer forecast that values would continue to remain steady in the year ahead, supported by strong fundamentals in the investment and occupier markets.