The total return on the SCS / IPD Irish Quarterly Property Index for the three months to 30th June 2008, was -6.2% q/q, the lowest ever quarterly return in the index history which dates back to 1995. Capital values fell by -7.2%, while income return remained unchanged at 1.0% for the quarter.
The dramatic fall in capital values, in spite of an improvement in rental values across all sectors, is attributable to increases in yields. At the All Property level the increase in yields detracted -8.2% from capital value in Q2 alone. Average yields have ballooned to 4.6% at end June from a low of 4.0% just six months before.
Retail property, where yields are tightest, was most affected by this repricing and capital values slid by -8.1% over the period. Capital values for Offices fell by -7.3% and for Industrials by -2.2%.
The All Property total return of -6.2% compares to -2.7% for the UK over the same period, according to the IPD UK Monthly Index. However over the year to June 2008, Irish property has had better performance with a total return of -4.5% for the year compared to -14.9% in the UK.
"The capital value falls in the second quarter have brought yields back to the same level seen two years ago. This re-pricing of the sector has been triggered by the credit crunch and reflects an economy wide re-pricing of all risky assets." said IPD Research Manager Angela Sheahan.
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