Significant rental increases for retail premises in Dublin are predicted in the coming year by Gunne Commercial's research department, because of the continued boom in retail sales.

Key money of £300,000 has been paid for some properties near Grafton Street, it reports. Pedestrian footfall on that street on Saturdays increased by 36 per cent in the second quarter of 2000, compared to the same period the previous year.

The 20.3 per cent rise in retail sales in the second quarter is due to consumers' increased disposable income, and the sterling/ pound differential which has attracted large numbers of Northern Irish and British shoppers here.

Transactions in income-producing retail properties in the Dublin region with values over £500,000 reached £10.7 million in the first six months of 2000, according to the report. Elsewhere, the sale of Merchant's Quay shopping centre in Cork for a reported £25 million was the largest investment sale this year; Shannon Town Centre in Co Clare sold for £7.3 million.

The report predicts that employment in the retail sector, which accounts for 11 per cent of total employment in the Irish economy, will rise in the years ahead. It also anticipates "a dramatic increase in cross-Border retail expansion and an increase in the number of UK, American and international retailers looking to locate here in the next few years".

It also expects that city centre retail outlets will perform well despite the growth in the number of suburban and provincial retail developments.

In the short term, it believes that labour shortages and wage inflation are the greatest threats to the retail sector.