According to a report by commercial property consultants CBRE, showing that €84m was invested in retail investment properties during the first half of this year, accounting for 14% of commercial property investment activity.
Prime retail yields have contracted since the beginning of the year in response to the upsurge in investor demand. For example, prime rents on Dublin’s Grafton St have fallen to around €4,000 per square metre and are down 60% on peak values six years ago.
CBRE Ireland executive director Marie Hunt said: “Although retail sales data remains volatile, there has been considerable leasing and sales activity occurring in the Irish retail market during 2013, particularly in the Dublin market, with a number of retailers actually now finding it difficult to secure stores in their preferred high street and shopping centre locations.
“However, this is clearly not the case in provincial locations where conditions remain difficult.”
However, CBRE added that it remains to be seen what, if any, impact the earlier budget announcement will have on the retail sector.
It noted that the issue of rates continues to frustrate retailers around the country and is particularly pertinent to retailers in locations where revaluations are currently taking place — including Dublin city centre and Waterford city centre.
These assessments are due to take effect from the beginning of January.
“Unless retailers successfully appeal these rates assessments, significantly higher rates may be payable from next year. In many cases, the cost of rates is prohibitive relative to the rental payments payable, considering the extent to which prime rents have decreased from peak,” CBRE said.