These are among the findings in the authoritative MSCI/SCSI Ireland Quarterly Property Index.
It showed the value of Dublin offices fell 5pc in the quarter and 15.9pc in the 12 months. Those in Dublin 4, including leafy Ballsbridge, fell by 8.7pc in the quarter and 19.8pc over the 12 months.
The more sought-after Dublin 2 offices dipped 4.5pc in the quarter and 15.8pc in the 12 months. These falls are due to investor caution about investing in offices because of higher interest rates on mortgages, as well as the effects of working-from-home trends, which have undermined demand for office space.
Dublin retail properties, including high streets and shopping centres, fell 4.1pc in the quarter and 9.2pc in the 12 months.
Reflecting investor interest and consumer spending, retail warehouses delivered a positive 12-month total return of 0.9pc, while investors’ returns from standard shops fell 6.4pc.
The index is based on tracking the performance of 316 Irish property investments, with a total capital value of €5.7bn as at December 2023.
A smaller index compiled by agents JLL found that its office property values fell 16.9pc year-on-year, while capital values for the apartment blocks in its portfolio fell by 13.9pc.
JLL economist Niall Gargan said its index suggests the current downturn in the commercial property cycle may be reaching its lowest point.
“Rental values have remained relatively stable despite the challenges in the market,” he said. “The industrial sector has outperformed the market with an annual ERV [rent] increase of 11.9pc, the largest increase since Q4 2016.”
In contrast to the value of the offices themselves, rents in this sector “have remained stable over the past four quarters, with no significant changes”.
“Retail rental values have recorded an annual increase for the second consecutive quarter, up 2.5pc year-on-year,” he added.
“Uncertainty isn’t going away in 2024, but we expect to see the return of predictability in some important areas, which we think will be enough to kick-start a recovery. The stabilising economic environment will enable investors to execute their strategies in a way they couldn’t in 2023. The return of stability and predictability to debt markets will be a driver of improved transaction activity. Clarity on interest rates will provide lenders and investors alike with the conviction to stabilise pricing, which will unleash the dry powder and investment strategies which have been building on the sidelines.
“Investors and corporate leaders planning to wait another year to act on medium and long-term strategies risk missing out on emerging opportunities, falling behind competitors and, unwittingly, embedding higher costs.”
