Dublin office rents look set to climb to as high as €50 per sq ft, thats according to the latest report by Davy Stockbrokers on the commercial property sector, thats a potential increase of 40% on current rates.
“There has effectively been no new commercial build since 2010, but the uplift in values and fundamentals now supports new projects. But with near-term supply likely to be constrained, we believe rents can get back to €538 per sqm (€50 per sq ft) from €377 per sqm (€35 per sq ft) currently. In addition, some further yield compression is likely. All this suggests further upside to capital values,” according to the brokers analysts.
“After a dearth of activity between 2009 and 2011, the price discovery process in the Dublin office market is now firmly underway.
In addition to the jump on rents Davy suggests that volume levels will “remain strong”, highlighting that real estate-backed debt marked for sale is close to €32bn.
“Prime Dublin office yields have compressed from 7.5pc in 2012 to 5.75pc currently and capital values have appreciated 25pc to 40pc since September 2012. A recent feature of the market has been the arrival of foreign capital; overseas investors have been responsible for 60pc of the €2.4bn invested over the last two years,” the reports details.