Ireland has delivered the first positive quarterly total return in two years, with a modest 0.4% delivered in the three months to end of March, according to the SCS/ IPD Ireland Quarterly Property Index.
The return to positive property performance was driven by the shallowest quarterly capital depreciation, at -1.8%, since the Irish market turned in the final quarter of 2007. The tail-off in capital depreciation reflects a positive yield impact, at 80 basis points, while rental pressure eased to its lowest quarterly decline since this time last year, at -3.3%. All property initial yields expanded by a fractional three basis points to 8.2%. Since the market peak in Q3 2007, Irish commercial property has now fallen by -56.3%.
Within the main retail segments in Q1, there was a significant quarter-on-quarter improvement in Henry and Mary Street, with capital depreciation easing from -6.9% in Q4 last year to -1.3% last quarter, while rental pressure softened from -10.5% to just -0.3%, over the same period.
By comparison, Grafton Street delivered an equal -1.3% capital depreciation in Q1, reflecting a shallower 160 basis point deceleration, while rental value falls eased by 260 basis points to -1.0%.
Within the office sector, the dominant central Dublin market delivered -2.2% capital growth, driven by the strongest positive yield impact among all segments, at 1.4%, reflecting improving sentiment and aided by a 300 basis points improvement in rental pressure quarter-on-quarter, at -4.8%.
Sasha Thomas, Service Manager for Ireland at IPD, said: "The return to positive quarterly property performance in the first quarter is the first step on the road to recovery for the Irish market. For two consecutive quarters both rental value growth and yield pressure have eased, which is an encouraging sign for investors.
"Overlaid upon this, are broader signs of recovery in Ireland's economy, following the Bank of Ireland's Quarterly Economic Outlook indicating last Monday that GDP is expected to return positive in Q1. With both macro-economic and property fundamentals improving, the indications are that the worst of the property recession is, possibly, behind Ireland."