The Irish property investment market turned around in the first quarter of 2003, with capital values rising 0.8 per cent in the first increase since December 2001, the Investment Property Databank (IPD) said today.
"These figures show that the Irish property investment market is beginning to turn the corner. However it still has a good deal of ground to make up," Mr Mark Callender, IPD research director, said in a statement.
All three sectors of the investment market (office, retail, industrial), had positive total returns for the first quarter. Although office returns were at their highest for over a year at 1.4 per cent, they still lagged the retail sector by a significant margin at 4.3 per cent.
Rental value growth slowed to 0.4 per cent in the first quarter, but this was offset to some extent by a fall in yields of 0.03 per cent.
"Significantly this is the second quarter in succession that yields have fallen, which may indicate that market confidence is improving after 21 months of rising yields," the IPD said.
Measured over a 12 month period to March 2003, total returns stood at 4.5 per cent, almost unchanged from 4.7 per cent for the year to March 2002. Capital values declined by 1.0 per cent as a marginal increase in rental values was more than offset by a per cent rise in yields.
Irish bond returns fell to 2.3 per cent in the first quarter, from 3.3 per cent in the last quarter of 2002, but were still slightly ahead of total property returns at 2.2 per cent.
Equity returns were once again negative as the threat of war in Iraq depressed global markets.
The Irish Property Index covers 342 properties, worth euro 3.7 billion as at March 2003 - around 85 per cent of all institutional investment in the market.