Making predictions for the year ahead is always daunting. However, everything pales in comparison to the task of next year's sages. How can anyone forecast for the year 2000 without putting pen to paper on their thoughts for the millennium?

At the risk of jumping ahead of myself, the fact that we are embarking on the third millennia AD will have an impact on the business of property during the year.

Deadlines have a great habit of increasing activity - we see evidence of this approaching the Christmas break in a normal year. I think the finality of 1999 will make people more inclined to act on long-term plans. So expect to see a rush of deals closing before the parties begin at the end of the year.

The performance of the market is fundamentally dependent on a healthy economy, confidence and cheap finance. Ireland is in the lucky position of having wonderfully positive signs on all of these fronts. It is safe to say that property will at least maintain the return of 32 per cent turned in during 1998.

The question will be asked "will values continue to increase"? The resounding answer is yes. The value of commercial property is principally driven by growth in rent levels and the cost of finance.

First let's look at the prospect for rents. In each of the three principal commercial markets - office, retail and industrial - demand is still outstripping supply.

Supply will not dramatically increase until 2000, so rents will increase in 1999. Second, historically low interest rates are having a twofold effect on values. Constant reductions in funding costs are allowing investors to bid higher multiples for properties producing income flows. Inflation rates below the agreed 2 per cent band across the euro should allow scope for further cuts (unbelievable as it may seem) this year. Low interest rates are also making gilts and equities wholly unattractive to investors, and this is creating new demand for the higher returns available in property.

Add in to this new entrants to the market, and you have a lot of potential buyers chasing available buildings. Occupiers and investors from our euro neighbours will look to capitalise on what will be a new avenue of investment for them.

We have established that values will rise and that buyers will out-number the properties available. So where are the opportunities and where will the deals happen?

The average investor is becoming priced out of the market in the era of seven-figure deals. High net worth individuals, investment funds and public companies occupy the upper end of the market. Syndicates are a possibility through which the average investor can get involved. However, legislative and banking difficulties are hindering this route before it gets started.

Publicly quoted property companies, such as Dunloe Ewart and Green Property, offer an easy route to capitalise on the market growth. Most importantly, they offer an easy exit mechanism in times of uncertainty. The same goes for managed funds run by Bank of Ireland, Irish Life and AIB among others.

For direct investment, opportunities will be hard to come by. If you agree with my sentiments about strong occupier demand, then buying a vacant building and letting it afterwards will offer better returns. For those inexperienced in the market, good advice on location and building quality would be the key before embarking on this road.

Despite the attraction of 20 percent capital gains tax, existing owners are showing reluctance to cash in their chips and offer buildings for sale. The recurring reason is the lack of options to re-invest. So while the size of our market was once an inhibiting factor to capital growth, it is now one of the principal driving factors to rapid growth in value.

Although values are rising and returns dropping, the UK does make an attractive alternative. By its very nature, the supply of product is far better than this side of the Irish sea (although this is now beginning to change) as is the quality of tenants available.

There are other reasons for buying in the UK. With the UK now seemingly on track for euro integration, interest rates will fall further, showing accelerated capital growth. Transaction costs are also lower. The unique concept of "privacy of contract" which virtually guarantees the income stream in the UK also gives added appeal.

If you are considering buying in the UK, watch for over-rented properties, which may need a major swing upwards before you see capital growth. Be aware of non-prime cities or locations. The UK market is very fragmented, so be properly advised. Finally, from our own experience, deals happen fast in the UK, so be prepared for some "wild goose chasing" before you land your deal.

The underlying problem for 1999 in Ireland will be the scarcity of produce.

Ronan Webster is director of investment at Gunne Commercial.