The property sector, more than any other sector of the Irish economy has changed dramatically in the last 15 years. The most notable change is that the stock of property in all sectors of the market has grown significantly in the 15 year period with the amount of office, industrial and retail stock expanding by at least 50 per cent on average since 1987. In addition to an increase in the stock of property, capital and rental values have increased by fourfold since 1987.
Achieving total returns of over 20 per cent per annum in the commercial property market, as we witnessed in the period from 1996-2000, was a pipe dream in the 1980s when the market was only beginning to recover from several years of recession, with properties only showing marginal growth due to a combination of adverse economic conditions. Given the dramatic turnaround in economic activity that was witnessed in Ireland in the 1990s, it is no surprise that we saw a surge in the performance of the property market, being that the market is inextricably linked with economic activity. Interest rates have converged to low levels in comparison. In addition to the notable increase in the supply of property since 1997, increases in the level of foreign direct investment together with improvements in demographic and economic conditions in Ireland over the last 15 years has meant we have also witnessed a significant increase in demand.
Property types, specifications, layouts and locations have changed significantly in the 15-year period also. We have witnessed the development of the very successful IFSC, which has been a catalyst for development in the Dublin Docklands and has been a huge driver of demand from overseas companies. We have seen the development of many suburban office parks and the development of town centre developments including Blanchardstown Town Centre, The Square and Liffey Valley. We have seen the industrial market changing with the typical 1970s/1980s industrial buildings being replaced by modern high-bay warehouses in landscaped surroundings to cater for the needs of modern occupiers. We have also seen the emergence of retail warehouse developments, which were unheard of in Ireland in the late 1980s.
We have also seen a shift in traditional locations with a large percentage of industrial development now occurring around the fringes of the M50 road network and traditional industrial locations such as Sandyford and the Naas Road being developed for office use.
Since 1987, the Investment Property Databank and the Society of Chartered Surveyors in Ireland have been compiling a quarterly Irish Property Index, which has enabled the analysis of performance in various sectors of the commercial property market. In addition, since 1990, the major commercial property companies have established dedicated research departments, which have facilitated specific analysis of the property market, something that was impossible only 15 years ago.
The first issue of Finance magazine in 1987 identified four trends, which were likely to have the most influence on the property profession going forward. These trends were securitisation, deregulation, globalisation and technology. Securitisation never happened but it has in effect, been superseded by syndication, which has opened up the market to a much wider audience.
Globalisation has probably had the most significant impact on the property industry. Having access to global markets is now essential in the commercial property market - a fact that we acknowledged by joining the Insignia network in the 1990s. The adoption of the euro has also been significant in that the property market is now more transparent across Europe, a factor that will undoubtedly influence investment patterns in the coming years.
Our competitors in the commercial property market have generally remained the same since 1987 but the main change that has been witnessed is a significant expansion in the number of specialist services that commercial property companies now offer to clients.
In addition to the core traditional agency and valuation services offered in 1987, most agencies now offer services such as property management, project management, fund monitoring, consultancy and property research. The number of educational facilities offering property-related courses has increased since 1987 with colleges in Bolton Street, Galway, Cork and Limerick now offering property qualifications in various disciplines. In addition the gender balance in the surveying profession has seen some change with more females now pursuing careers in the commercial property market.
Looking forward, against an uncertain international economic background, a stock market lacking direction and low interest rates, property will continue to play an important role in investment strategy. |
