Stamp duty increase fails to slow commercial property growth

Ireland's commercial property market continues to report stable growth as the JLL Property Index, to be released on Wednesday, shows that overall returns increased by 2.7 per cent in the last three months and by 10.7 per cent over the last year.

The good results are all the more surprising as the market has had to absorb the effects of a stamp duty increase in December.

Capital values grew by 1.5 per cent in the last quarter and by 5.5 per cent over the past 12 months. The growth was predominantly led by the industrial sector. The capital value index has increased by 90.4 per cent since the trough in 2013 but remains 37.5 per cent below the peak in 2007.

Overall income increased by 2.1 per cent in the last three months. The index portfolio showed an income yield of 4.6 per cent across all sectors.

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Rental values across the index portfolio increased by 1.7 per cent in the last three months and by 7.5 per cent in the last 12 months. Offices have had the greatest increases over the last 12 months (up 9.6 per cent) followed by retail (up 5.6 per cent) and industrial (up 3.7 per cent).

John Moran, JLL’s head of investment, said the index had shown steady performance in the first months of 2018. It had reverted to normal growth following the stamp duty increase in the last months of 2017, which virtually cancelled out capital growth in the previous quarter.

Investors had achieved strong overall returns, increasing by 10.7 per cent in the year to March 2018, and the yield remained steady at 4.6 per cent. Of particular note was the strong growth in industrial capital values, which was primarily a result of strong occupier market fundamentals.