Overall returns from the Irish commercial property investment market grew by 40.1 per cent year-on-year in the final quarter of 2014, according to the latest IPD/SCSI property index.

The returns are easily the best since the index was launched 30 years ago.

The findings are broadly in line with expectations after a runaway investment market last year when the overall spend exceeded €4.58 billion.

Offices continued to lead the market in Q4, returning 8.7 per cent in the last quarter and 45.3 per cent year-on-year compared to 18.3 per cent in 2013.

Performance

Irish retail properties produced a performance to rival offices, with returns reaching 8.8 per cent in the final three months of 2014 and 34.7 per cent over the year as a whole.

The latest study shows that the high returns in the office sector stemmed mainly from a strong occupier market, with rental values up 6.9 per cent in Q4, far higher than for the other main sectors.

The consensus seems to be that higher rents have now been firmly established as the key driver of office returns rather than the repricing that drove the market recovery in its early stages.