A second report on the commercial property market confirms that returns for the year should end up at around 26 per cent, 3 per cent lower than in 1999. The Jones Lang LaSalle Irish Property Index shows that overall returns for the year to September were 25.9 per cent. If the fourth quarter turns in a similar performance, then the 26 per cent figure can be achieved.

The report is broadly in line with the findings earlier this month by the London-based Investment Property Databank (IPD). It also expects returns for the year to come in around 26 per cent, representing a slippage of 4 per cent based on its previous year's figures.

Jones Lang has calculated that capital values rose by 4.8 per cent in the third quarter of 2000, compared with the second quarter level of 5.3 per cent. This brings capital growth in the year to date up to 15 per cent, with an increase of 20.3 per cent in the year to September.

The fastest capital growth in the year to date is in the office sector, where values rose by 5.6 per cent, giving a 16.5 per cent increase in the year to date. This capital growth is mainly underpinned by rental values rather than significant yield adjustment.

The retail sector grew by 5.6 per cent in capital value in the third quarter and by 13.3 per cent in the year to date. Industrial capital values were a little faster in this quarter, growing by 3.8 per cent, with an 11.6 per cent increase in the year to September.

Jones Lang found that rental values continued to grow in the third quarter, rising by 4.2 per cent across the portfolio. This brings rental growth to 13 per cent in the year to date, and to 16.8 per cent in the 12 months to September. The pace of rental growth is being sustained, driven by offices, but with retail and industrial showing healthy growth also. The high rental growth of recent years is beginning to be reflected on reviews of older buildings, thus filtering the effect of new lettings down through older portfolios.

Office rental values increased by 5.1 per cent in the third quarter, bringing growth for the year to date up to 15.4 per cent.

This compared to industrial rental values, which grew by 3.9 per cent in the third quarter and by 9.6 per cent in the 12 months to September. Retail rents in the third quarter showed the slowest growth at 3.5 per cent and 10.6 per cent in the year to date. In the case of the high streets, there is a sense of latent growth which cannot be confirmed until more evidence is collected.