A REDUCED PRICE of €5 million is being sought for the O2 shop at 50 Grafton Street, Dublin 2, which will show an income yield of 7.28 per cent after normal purchase costs are taken into account.

Joe Bohan of agent HWBC is handling the sale of the investment which is currently producing a rental income of €380,000 per annum.

The 35-year lease has almost 12 years to run – without breaks – and the next five yearly upwards-only rent review is due at the end of December, 2013.

One of the attractions of the shop is its established mobile phone use as the city planners are firmly against allowing any further phone outlets on Grafton Street.

FC Reit Asset Management originally offered the building for sale in November, 2010, at €5.8 million and though there was initially strong interest in it, the investment market took a hit with the arrival in Dublin of the IMF and the subsequent failure of Royal Liver to sell a high profile portfolio of mainly Grafton Street properties.

The investment climate deteriorated further during 2011 when the Government threatened to end upwards-only rent reviews in existing leases – a move that was subsequently dropped.

The recent reduction in stamp duty from 6 to 2 per cent and the introduction of a more favourable capital gains tax regime is designed to trigger renewed interest in commercial property investments.

In the meantime, capital values on Grafton Street have fallen by over 70 per cent and, according to Joe Bohan, many experts now believe they are close to or at the bottom of the cycle.