The property market across Europe turned in the summer of 1996 - and a recovery is now well in place in the Northern countries, according to a report from ONCOR, an international network of estate agents.

Using a system of weather symbols to denote the state of the market in each country, the report states that Denmark, Luxembourg, Sweden, The Netherlands and the UK have joined Ireland as countries where the sun is now shining, with rents and values moving upwards, yields moving downwards and a high level of activity. There is a rainbow over Germany and Switzerland, which denotes a market trough with the market still in poor shape.

Showing that trends are now common across Europe, the survey demonstrates that, as in Ireland, offices were the best performing sector in Europe last year, having turned the corner in mid-1996 after a long period of decline. Dublin prime rents registered an increase of 6 per cent, well ahead of the European average of 2.3 per cent.

Behind this average, there was a significant variation in the performance across Europe with Amsterdam, Madrid and Milan seeing major increases over the year, while rents continued to fall in Germany, with Berlin and Frankfurt now being 20 per cent below their 1993 levels. Even at these levels, Dublin sits well down the league table of office rents in European cities. Not only are most central and eastern European cities more expensive than Dublin, but many cities in the UK outside London, including Birmingham, Bristol, Edinburgh, Leeds and Manchester, have high rents.

This is encouraging news for international companies coming to Ireland, as Dublin office rents are still very competitive. Yields fell across Europe as they did in Dublin, where since the end of the year, yields have probably dropped at least another 0.5 per cent. Europe-wide, a comparison shows that office yields in Dublin are well below the average of 8.6 per cent. However, this average is pulled up by the eastern European countries, where obviously there is a bigger risk factor and the fact that European leases are on a different structure with a 3-6-9 year term or 5/10 year term being the norm.

In the retail market, Dublin somewhat surprisingly features in the Top 10 highest rented retail cities in Europe, behind Frankfurt and Zurich, with London again topping the league. The high level of rents in Dublin is a reflection of both the level of increase in consumer demand and a shortage of shop units in our principal retailing streets. Rents in the retail sector lagged behind the other two sectors at a 2.1 per cent average increase across Europe, while rates in Dublin's prime streets grew by approximately 8 per cent. Scandinavia, where rents jumped by 14 per cent, was the best performer, but on the other end of the scale, Leipzig was a disaster, with rents falling by over one-third.

Although the average increase of industrial rents was 2.3 per cent across 62 cities, some cities witnessed substantial hikes in rents. Turin rose by one-third, while rental levels in Belfast as well as Berlin, Gothenburg, Nice and Prague grew by 20 per cent or more.

There was wide polarisation in rental performance in the principal European countries, France, Germany and Italy, with rents rising and falling in different cities, in some cases, by substantial amounts. In Ireland, rents continued to rise by a steady 4.2 per cent.

The report also looked at building costs, where prices rose by an average of 5 per cent across Europe. In Ireland, which is experiencing a building boom on the back of the Celtic Tiger, costs rose by an average of 7.2 per cent.

With the outlook continuing to be good for the market in Ireland, the sun looks as though it will continue to shine over us and the ridge of high pressure will spread south across the European property map.

Ian French is Chairman of Hamilton Osborne King, the only Irish member of ONCOR. A fellow and past chairman of the Society of Chartered Surveyors, he has 29 years experience in the commercial property market and specialises in investment and office agency advice. He is also responsible for international business.