Investor yields soften in retail but harden in residential property sectors

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Investor yields soften in retail but harden in residential property sectors


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Yields for Irish shopping centres and secondary retail warehouses have softened further over recent months, mirroring a trend that is being experienced in the UK and across Europe at present. These are among the findings in the latest CBRE bi-monthly report on Ireland’s commercial property market.

Comparing them with 12 months ago, retail prime shopping centre yields have weakened 50 basis points (bps)from 4.75pc to 5.25pc and retail high-street yields at 3.25pc have extended from 3.15pc since April 2018. Super prime shopping centre yields are unchanged at 4.25pc but are trending weaker.

Both retail warehouse and student accommodation have seen their yields stabilise at 5pc and 5.25pc respectively.

Build-to-rent residential yields have strengthened by 40 bps to 3.85pc compared to 12 months ago and have overtaken offices which, while trending stronger, are unchanged at 4pc. Also trending stronger are industrials, by 40bps to 5.1pc.

Marie Hunt, director of CBRE Ireland, says that while prime office, industrial and multi-family yields in the Irish market remain stable, they have potential to harden a little over the coming months as new transactional evidence materialises.

Meanwhile, the latest Savills investment report says that despite investors’ ambivalence towards retail property at a global level, stores in Ireland’s prime locations are trading well and continue to attract capital.

“The retail warehousing sector is currently outperforming in both the occupational and investment markets and this should be sustained as the flow of new housing development strengthens,” says John McCartney, director, Savills Ireland.

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