COMMERCIAL property deals will surge next year as NAMA begins to sell land, receiverships increase and new tax measures encourage the sale of hotels, according to Guy Hollis, the managing director of CB Richard Ellis Ireland.
"We expect to see a notable increase in the volume of investment properties being offered for sale in 2011 as banks and borrowers start to unwind their positions and NAMA begin to work through business plans with borrowers," he told the Irish Independent yesterday as a separate report from Ulster Bank showed activity in the construction sector was shrinking rapidly.
The vast majority of the prime investment assets are likely to be purchased by overseas buyers, Mr Hollis said.
Commercial rents will continue to fall, especially in secondary areas, but prices may rise by single digits, Mr Hollis forecast. There will be many more transactions as business owners move to small offices.
"The outcome for the commercial property market is largely dependent on the direction the wider economy takes over the course of the next 12 months," Mr Hollis said.
"However, I am confident that a firm line has now been drawn on the sand and 2011 should see the Irish commercial property sector starting to emerge from the most significant and unprecedented crash it has ever experienced."
The forecasts came as the Ulster Bank Construction Purchasing Managers' Index showed that construction activity declined at a faster rate in November than the previous month.
The index posted its third consecutive monthly decline, taking it back to its lowest level since May. New business and employment in the sector also fell at a faster rate, while business sentiment was negative for the first time since last December. The seasonally adjusted index activity fell for the third month running to 41.7 in November, from 42.3 in October.
"The November reading of the Ulster Bank Construction PMI signals a further deterioration in conditions facing Irish construction firms," said Ulster Bank economist Simon Barry.
Declining levels of new business remains a critical issue, as tentative signs of stabilisation in the summer have given way to renewed weakness in new orders. The decline in workloads continues to put downward pressure on staffing levels, with the survey showing the pace of job shedding accelerated to its fastest pace since May.
Business sentiment was negative for the first time in 11 months, with sentiment the weakest since May 2009.
- Thomas Molloy
Tuesday, December 14, 2010
Surge in property deals expected next year - Irish, Business - Independent.ie