The total return on the SCS / IPD Irish Quarterly Property Index tumbled -13.9% q/q over the three months to 30th September 2008, eclipsing the record quarterly returns fall posted the previous quarter. Year to date total returns now stand at -21.2%, wiping out gains accrued since Q3 2006.
Annualized total returns over three years to September 2008 are significantly down compared to the previous quarter, at 6.1%. Unsurprisingly, the bulk of the damage came from a dramatic -15% capital value slide over the three months, cementing the fourth consecutive quarter without any capital value gains. Marginal insulation was provided by the highest quarterly income return recorded since Q1 2006, at a modest 1.2%.
All Property yields contracted for the fourth consecutive quarter. Over the three months to September 30th, the detraction was -15.4%, forcing down the three-year annualised yield impact into negative territory, at -2%, compared with 4.4% as at end of Q2. All Property equivalent yields, which compare investment valuations across different market segments in any one year, have risen to their highest level since Q1 2005.
Total returns on the All Retail index fell by a significant -17.3%, owing to a -18.1% decline in capital growth for the hard-hit sector. The scale of the one quarter losses has pushed down the three-year annualised total returns to 3.8%, compared to 12.6% for the equivalent figure for the end of June. Capital values for Offices fell by - 13% and for Industrials by -10.1%.
IPD Head of Indices Angela Sheahan said: "These numbers confirm the losses expected by the market for several months. This dramatic period of property repricing has been underway for some time, predicated by a widening gulf between investor confidence and real estate fundamentals."