While the residential property market suffered during the year, the commercial side of the business held up comparatively well. Both capital and rental values proved resilient, although returns were down on 2006.
In December, Jones Lang LaSalle said that Irish commercial property provided investors with returns of 8pc in 2007, far behind the 30pc recorded in 2006, but still beating most world stock indices as they took a beating during the year.
Other agencies reported similarly positive notes.
In February, a report by Cushman & Wakefield said that Dublin was now the sixth most expensive location for office space in the world, up from number 12 a year earlier. By November, another report ranked Dublin ninth most expensive.
Lisney noted that by mid-summer, Dublin was experiencing an “office-building boom” and that construction in the sector was up fivefold in the first six months compared to the same period in 2006. About 44pc of the office space under construction at the time was already pre-let.
CB Richard Ellis said the Dublin office market had remained buoyant, with letting activity in the sector set to break records for the year. In the three months from September to November, 80,190 square metres of lettings for Dublin office space were signed, giving a total amount of 200,000 square metres for the year to date. CB Richard Ellis predicted that by the end of 2007, over 250,000 square metres of office space lettings would be signed in the capital.
That was a level never previously achieved in Dublin, although the firm believed it was unlikely to be replicated in 2008.
Prime office yields in Dublin remained static at about 3.75pc during the year, while CB Richard Ellis said there was untapped demand for about 300,000 square metres of office space in the capital. Lisney estimates that “at least” another 200,000 square metres of office space will be constructed in Dublin in 2008.
But it’s overseas where many Irish investors are still stuffing their money.
Jones Lang LaSalle said that in the first nine months of 2007, Irish investors pumped €8.2bn into foreign commercial property, compared to an estimated €6bn in the same period in 2006.
But with the commercial market softening overall in the UK, which has traditionally been a prime target for Irish money, investors may have to begin looking even further afield to find value in 2008.