REVIEW 2016 & OUTLOOK 2017
Welcome to our Annual Review & Outlook Report. Here you will find detailed information on the year that was and what we anticipate in 2017.
As always the world we operate in changes and we are determined to be on top of the markets we operate in and provide our clients with the right advice.
We look forward to working with you in 2017 and beyond.
For the full report click on the button below or scroll down to access individual sections.
The Dublin residential market stabilised somewhat in 2016 as both buyers and sellers had to align expectations in order to close a sale. The Lisney index of prices grew by 3.8% in 2016. The opening and closing quarters of the year saw the greatest growth at 1.4% each. Price growth will be moderate with our models suggesting between 4% and 5%.
DEVELOPMENT LAND & NEW HOMES
The development land market continued to perform well in 2016, with a relatively strong volume of sales achieved. The supply of new homes remained suppressed during 2016, in spite of strong demand and positive economic fundamentals. In the latter part of 2016, there were positive signs that the supply of new residential property was gaining momentum, with a number of developers commencing on-site works. This momentum will gather pace in 2017, with a number of large multi-phase developments due to get underway. Demand will be buoyant for residential sites in 2017, particularly those that are suitable for starter homes.
Entering 2017, the investment market has the least certain outlook since the depths of the downturn. This is mainly due to the large volume of property that has transacted since 2012. Private investors will continue to buy property as an income generating, real asset. There are still good opportunities in major Irish towns and cities at prices well below replacement cost.
While not as busy as recent years, the loan sale market was active in 2016. Yet again, NAMA was a very busy player in the market. Apart from NAMA, Danske Bank and RBS (Ulster Bank) were also sellers during 2016.
Unlike many other parts of the economy, Brexit should have a positive impact on the Dublin office market in 2017. There will be increased activity from companies looking to relocate from London and elsewhere in the UK as a result. This is likely to culminate in various deals being agreed towards the end of 2017. New office construction will continue to be one of the main talking points in 2017. In terms of what was under construction at the end of 2016, the figure reaches almost 320,000 sqm in the entire Dublin region.
The strong activity over the previous two years in the industrial market continued into 2016. Sales activity did drop in 2016, due to the scarcity of stock but also due to the number of owners that have purchased buildings under the Capital Gains Tax holiday. This will continue to limit the number of properties coming to the market for sale up to 2020.
Vacancy rates in Dublin and in prime retail locations nationwide have reached extremely low levels. With little or no new construction underway, expansion opportunities in key areas will be difficult for the foreseeable future. There is an increasing variance in the level of rents that different types of retailers can pay. Restaurants and food operators have been the driving force behind the increase in rents in schemes.
Demand for prime investment assets in the Cork region will remain strong. Construction will commence on new office schemes in 2017, however no new speculative development is anticipated in the retail or industrial sectors. In the residential market, construction is expected to start on a number of schemes in the suburbs and satellite towns to meet growing demand.
The Northern Ireland property market in 2017 will experience similar challenges to that of 2016. The uncertainty that Brexit has brought to the capital markets will take time to play out. The lack of available properties, particularly larger buildings, will remain a concern in the office and industrial markets. Prime Zone A rents will increase during the year.