Noel Smyth, Chairman Dunloe Ewart Plc
The Irish property market is not unlike any of the other similar markets in the western world. The by-word for demand for space, increased rents and capital growth is "confidence" - which appears to be in abundance and there is every reason to assume that it will continue.
A lot of the space that will be occupied and/or offered to the market for sale during 1999 has to a large extent already been identified and, in some instances, contracted for.
Coupled with confidence and more space becoming available, the market is likely to consolidate well, with rent reviews, in particular of older buildings, playing catch-up on the rents that have been achieved in the past 18 months to two years.
I expect one of the big movers, however, to be Belfast, and the rest of the North. In a few short months since the Good Friday Agreement, the city has just begun to reawaken itself. It is hungry for business - it must represent the best value in rental and capital growth for any European capital city and it will prove to be real competition for tenants and business in Dublin.
Alan Bradley, Partner Jones Lang Wootton
Although all the pointers are to another good year, it is also widely accepted that there are negative factors on the horizon. These include: unsettled conditions in the global economy; threat of skills shortages, wage inflation; and infrastructural inadequacies.
Occupier demand for office space may slacken but will still be at healthy levels. With a vacancy ratio of below 3 per cent - and no imminent signs of over development - office rents will increase.
Prime high street retail locations will continue in strong demand but some rationalisation in suburban centres is likely as the market adjusts to recent developments, including Liffey Valley.
Overheating in the market for development opportunities seems imminent. Private investors will continue to avidly pursue property as a safe haven and will continue to outbid the institutions, which are inhibited by the league table syndrome and short-term performance. There is still some potential for growth in values because current yields are still relatively undemanding.
Ian French - Chairman Hamilton Osborne King
The party has to stop some time, but it's not going to be next year. In fact, with a booming economy, interest rates forecast to fall further and very low vacancy rates, property investment is likely to be a top performer next year. Compared with other types of investment, property looks excellent value: three-months deposit rates average about 3.5 per cent; gilts are at about 4.4 per cent, while equities are about 2 per cent. As for property, prime investments are 5.2 per cent. So, the partying is going to be good next year - perhaps not quite as good as this year, when the total return is likely to be 35 per cent. My prediction is that total returns will be a very nice 25 per cent plus.
Which sector is going to perform the best? My bet is that offices will receive the award, with retail giving them a good run.
Private investors and private investor syndicates will be the principal buyers of the goodies and we are likely to see European and US money joining the fun and games.
Ann Hargaden - Director of Lisney Agency
The property market is dependent on several factors, including overall economic performance, tenant demand, consumer confidence and interest rates. Interest rates are predicted to be even lower than they are now, and if this happens, they will continue to drive demand for property, especially if alternative assets produce little or no return. Even at low initial yields, property still offers value, particularly if rents continue to grow.
There is little sign of a slowing down in the Irish economy. However, there is some concern about world markets and the impact of the turmoil in the Asian, Japanese and Russian markets. Although the threat of a world-wide recession has subsided somewhat, if there were a slowdown, we are unlikely to escape and we might be "jolted out" of our cosy little world.
Meanwhile, unexciting prospects for cash and an uncertain equity market suggests that property will enjoy another good year.
Pat Gunne - Managing Director of Gunne Commercial
Taking into consideration the very favourable state of the economy, both in economic and demographic terms, the outlook for property in 1999 looks very favourable.
Falling interest rates as we enter EMU, demand outstripping supply in each of the market sectors, and shortage of supply in the investment market, will likely result in yield hardening over the short to medium term.
Investors will find it increasingly difficult to acquire product with returns to meet their expectations and will continue to look to both the North and Britain in search of properties that will give them higher yields.
Forward funding will also be attractive to investors in the same regard.
With equities still suffering from the recent stock market crash, gilts offering coupon rates which barely cover inflation and bank deposit rates not worth considering, property will likely be the flavour of 1999 and the new millennium.
John Finnegan - MD Finnegan Menton
Will it last? After yet another exceptional year, this is the question on everyone's lips. Lets look at the fundamental economic indicators for 1999. As I predicted last year, interest rates are at historically low levels with a base rate of 3 per cent (12-month money) following the recent co-ordinated EU cut, which should be sustained for the next few years. Projected GNP growth will be at a more sustainable level of 5-6 per cent; inflation is expected to be at c.2.5 per cent; there are record numbers now at work and employment is set to fall further from 7.8 per cent. Consumer spending is forecasted to grow by c.7.5 per cent.
Though we cannot ignore the slowdown in the UK, US, and, of course, Asia, our domestic economic factors are the envy of the world and underpin an ongoing period of continued growth.
It is my prediction that 1999 will be another exceptional year during which I anticipate further pressure on yields.
Irwin Druker, Partner Druker Fanning
We are travelling into uncharted territory with unprecedented low interest rates, an economic boom that does not seem to be running out of steam, and an insatiable demand for real estate and investment property. Lower money market deposit rates should keep pressure on demand, while the shortage of quality investment property will remain.
Forward-funding opportunities will be the most likely way in which institutions will be able to get into this market at realistic investment yields. Asset management evaluation by both institutions and property companies could provide a much-needed supply of good investment property. Rental growth, which is needed to justify some of the low yields, is beginning to come through, in the office sector in particular.
With high taxation on rental/investment income and high rates of VAT, substantial rental growth will be required to enable private investors, in particular, to repay borrowings. Caution will be needed by lending institutions who appear to have unlimited funds available for property and acquisitions should be viewed as long-term investments.
Killian O'Higgins, Director DTZ sherry FitzGerald
THE recent rapid falls in interest rates has led to an ongoing reappraisal of yields. The demand in the office market is still strong and the indigenous sector now offers competition to inward investors.
The significant rise in values is due to a combination of falls in yields, and rent rises. With a Budget delivering significant tax cuts, combined with strong job growth, the retail market will continue to prosper.
The industrial market suffers from a lack of tenants as potential occupiers, with cheap money available, prefer to buy. In 1999, investors will look on with interest at developers seeking planning for major schemes, particularly in south Dublin. In the middle of 1999, the yield curve will probably be at its lowest and investors will have to rely on rental appreciation. The best value is likely to be found in suburban business/office parks, where many overseas companies are attracted by rents of £12 to £14 per sq ft. Investors will also be looking at the UK and Europe, particularly France.
