December 2, 2009, 11:23am
There has been a peak-to-trough fall in capital values since the end of 2007 of around 56 per cent, overall returns in the year to September declined by almost 30 per cent and property sales are at their lowest level for many years. Worse still, few experts are calling the bottom of the market yet.
The tailspin of the last two years has meant that capital values are now back at the same level they were at in December, 1999, according to the Irish Property Index compiled by Jones Lang LaSalle. Even with the collapse in capital values, sales have been extremely sluggish, largely because of the absence of debt finance and uncertainty about the role of Nama in dealing with toxic loans and devalued properties.
Sales turnover this year has only reached €172 million and present indications are that the final figure will be no higher than €250 million to €270 million – a long way behind €1.64 billion invested in 2007 and the €3.62 billion spent in 2006. The discrepancy has been even more marked in the overseas markets where Irish investors have spent only €86 million so far this year compared with €2.1 billion in 2008 and a staggering €9.9 billion in 2007.
irishtimes.com/newspaper/com … 78459.html
Meanwhile, much bottom talk
Peter Stapleton, MD, Lisney
Has the commercial property market bottomed out yet?
The market is close to the bottom. Activity is very subdued. Sales are few and far between.
What will be the peak-to-trough percentage decline in capital values in this downturn? From 50 to 85 per cent.
Fintan Tierney, MD, DTZ Sherry FitzGerald
Has the commercial property market bottomed out yet? For prime assets in top locations it’s v
ery close to the bottom. In 12 months we will look back and see that the market stabilised during the first part of 2010 in most areas.
What will be the peak-to-trough percentage decline in capital values in this downturn? We anticipate that the IPD index in Q1, 2010 will show an average drop of 60 per cent from peak levels. There will be examples of individual assets having fallen by up to 70 per cent and even greater drops in the case of development land.
Ronan Webster, director, development, CBRE
Has the commercial property market bottomed out yet?
We are bouncing along at the bottom in the commercial property market. In years to come, 2009 will be seen as the low-point of the cycle.
What will be the peak-to-trough percentage decline in capital values in this downturn? A 55 per cent decline for income-producing properties in major urban centres. Greater declines are evident on vacant buildings and development land.
Angus Potterton, MD, Savills
Has the commercial property market bottomed out yet? Yes, or very nearly. Investors are starting to actively look again as they see value. Investment turnover will be only €125 million for 2009 compared to €3 billion at the peak in 2006.
What will be the peak-to-trough percentage decline in capital values in this downturn? Values will be down by 30 to 50 per cent.
Niall Gaffney, chief executive, IPUT
Has the commercial property market bottomed out yet? The fall in capital values suggest investment yields have largely bottomed. Yields are equivalent to those in the early to mid 1990s yet we could see falls in capital values in the first half of 2010 but this will stem from adjustments in the rental sector.
What will be the peak-to-trough percentage decline in capital values in this downturn? By the time this cycle runs its course values may have shifted from their peak by over 60 per cent.
John Moran, MD, Jones Lang LaSalle
Has the commercial property market bottomed out yet? It’s very close to the bottom but we wouldn’t like to call it yet. While we believe yields for prime properties may have reached the bottom, we’re seeing evidence of declining rental income. Hopefully, by the middle of next year the absolute worst should be over.
What will be the peak-to-trough percentage decline in capital values in this downturn? If the peak was December 2007, then the decline since is 53 to 57 per cent.
Just when it’s becoming repetitive
Stephen Vernon, chairman, Green Property
Has the commercial property market bottomed out yet? No. The concern is rising interest rates as the cycle moves on.
What will be the peak-to-trough percentage decline in capital values in this downturn? Some assets (development land unripe for development) by anything up to 90 per cent but quality investments with secure income streams in prime locations less than 30 per cent in some cases.
irishtimes.com/newspaper/com … 78493.html
Some of them chappies do not seem to think that high yields are a good thing for investors… they keep talking about ‘decline in yields’ or ‘yields bottoming’. As yields are rising (capital values falling faster than rents for the moment), they should be talking about yields topping out… no?
The only one here who understands the real situation is Stephen Vernon. It’s not over… and the elephant coming into the room will be the increase in interest rates as the world economy (NB: not ours) starts to pick up.
Agreed, Vernon is a punter is smarter than the average bear.
Mr. Vernon is also looking to pick up properties on the cheap. Nothing wrong with that, but he is also talking his book. It just happens to be a book that more of us would agree with!
December 2, 2009, 7:47pm
You are entitled to change your mind you know and when you do I will be very understanding