Overall returns from the Irish commercial property market in 1997 are now expected to hit 21 per cent - the highest level in the current cycle - according to the latest report from Jones Lang Wootton (JLW).
The returns in 1996 were just over 19 per cent.
With 1997 now facing into its final months, the figures for the third quarter are broadly in line with the previous three months. Overall returns - reflecting the combined capital and income growth - for the quarter were up 5.1 per cent, bringing the figure for the year to date to 16.6 per cent.
Margaret Fleming of JLW says that if this should continue pro rata for the final quarter, overall returns for the year will be around 21 per cent.
This performance is clearly underpinned by strong capital growth in all sectors, with an increase of just over 11 per cent in the year to date. Values have risen most steeply in the retail sector (up 12.4 per cent in three quarters) but offices and industrial are also growing strongly (plus 10.5 and plus 8.3 per cent, respectively).
Rental growth has been strongest in the office sector (up 7.1 per cent in the year to date), although industrial rents appear to have put in a spurt in the last quarter, rising by 5 per cent.
The property market continues to mirror the strong performance of the economy. Much of the economic growth is based on an unprecedented level of inward investment and the demand from these companies is driving the strong performance of property. Right across the range of office space, shopping centres, high streets and industrial property, international occupiers are boosting demand.
Ms Fleming says the presence of these companies is having a knock-on effect on indigenous companies, especially in the distribution sector, where the outsourcing of logistics by large manufacturers and retailers is benefiting Irish suppliers.
"In the past, Ireland has paid the price of being a small, open economy. Right now, the property market in particular is reaping the benefits of that very same feature. "Compared to past cases where the property market was driven on the crest of an economic wave, there has not been a frenzied rush of supply in this cycle of the market. "Frantic speculative building has so often killed the golden goose that perhaps - at last - the lesson has been learned. The developers' response to the market has been measured and cautious so far, to the benefit of all concerned."
Against this background, the commercial property investment market remains strong, with values rising and downward pressure on yields.
The total size of the market is being limited by the shortage of opportunities and market turnover for the year will probably be somewhat lower than the £300 million achieved last year.
The outlook is positive and the EMU scenario appears to be increasingly upbeat.
As long as Ireland retains its attractiveness to mobile investors there are strong grounds that the investment market will continue to thrive.
