THE COMMERCIAL property market has shown positive results for the second successive quarter.

London researcher IPD yesterday reported that total returns in the first three months of this year reached 0.6 per cent, helped by a slowdown in the rate of decline in values.

Values fell by 1.8 per cent in the first quarter after a temporary reprieve in Q4 of 2011 by the lowering of stamp duty from 6 to 2 per cent.

IPD’s Phil Tily said valuer sentiment remained guarded about the Irish market, with yield expansion still pushing down values. In what he described as a “cautiously optimistic note”, he said there were tentative indications of improving conditions in the occupier market, as rental declines slowed to -0.8 per cent – their lowest since 2008.

Rents have fallen by 47 per cent in the last three years and made the occupier market extremely competitive, he said. In recent months a variety of multinational retail and office tenants had taken space or shown interest in the Irish market. “After such falls, the sectors offer excellent value for occupiers.”

The SCSI/IPD study also showed that in the retail sector shops on Grafton Street delivered the highest total return of 1.3 per cent with shopping centres doing almost as well with a growth of 1.2 per cent.

In the office sector, central Dublin recorded a return of 0.8 per cent as capital declines slowed to -1.7 per cent.

Rental values fell by a marginal 0.5 per cent, their lowest since December, 2008, possibly as a result of increasing interest from international tenants focusing on Dublin.

Tily said that transactional activity remained muted but this appeared to be a result of careful due diligence on the part of investors.

The Government’s reforms announced in the December budget were taking effect, but slowly, and there were more transactions expected as the year progressed, particularly as investors took advantage of the moratorium on capital gains tax before the end of 2013.

“But while there are signs of life, and whilst the Irish market is expected to be one of the few Euro-zone economies set to see positive GDP growth in 2012, we should not ignore the fact that the Irish property market is still in decline,” he said.

Roland O’Connell, incoming president of the Society of Chartered Surveyors Ireland, said it was encouraging to see an improvement in conditions and in demand from both occupiers and buyers in the prime Dublin market.

This demonstrated that we were becoming increasingly competitive in attracting international investment.