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«The total return on the SCS / IPD Irish Quarterly Index in the fourth quarter of 2007 was 1.0% q/q. This represents a slowdown on the previous quarter when returns were 3.3% q/q. The total return over 2007 was 9.9% y/y. While being a robust return over the year, this is significantly less than the 27.2% y/y achieved in 2006. Over the 12 months of 2007, the 9.9% y/y total return on property out performed both bonds and equities with returns of 0.5% and -24.5% respectively. The annual total return was made up of 3.9% y/y return from rental income and a 5.8% y/y growth in capital values. The capital growth was driven by a 5.4% y/y improvement in rental value, and a slight fall in yields adding 0.9% y/y to capital values. In 2007 Offices was the best performing sector for the second year running, due to consistently strong rental value growth in all four quarters. Industrial came second due to advantageous yield movements, while Retail was slightly behind the other two sectors due to less strong rental improvements and yield movements. Despite continued growth in rents, the fourth quarter saw returns slow compared to the first three quarters of the year due to rising yields. In this slowdown in Q4, Retail performed best; capital values grew by 0.8% q/q compared to a fall in values in Offices and Industrial of -0.6% q/q and -0.3% q/q respectively. The growth in Retail capital values was due to rental growth as well as a less significant outward movement in yields. “While recent turmoil in global financial markets has decimated other property markets, Irish commercial property is yet to see a fall in the all property values. The wealth of Irish investors means that sellers have not been forced to accept slashed prices. The uncertainty has, however, meant there has been a decline in the number of transactions» (CS della Società)
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