NEW benchmark in Dublin office property yields was set yesterday when a building rented by the Ulster Bank at Shelbourne Road in Ballsbridge, Dublin 4, was sold at auction for £660,000. The price equates to a net yield of 3.84 per cent, easily the lowest return recorded in the Dublin property investment market in recent years. Two retail investments in Dublin's Grafton Street were sold in the past three years at yields slightly below 5 per cent.

Estate agents Lisney had been quoting a preauction guideline price of £400,000 plus for the high profile Edwardian building which has been held for many years as an investment by the Bank of Ireland.

There were 10 bidders at the auction when bidding opened at £400,000. It was declared on the market at £450,000 but four parties continued to chase it up to £620,000. At that stage two of the bidders dropped out and it was eventually knocked down to a Dublin solicitor who was acting for an undisclosed purchaser.

Although prime retail investments are in particularly short supply in the Dublin market, yesterday's auction price took many investors by surprise. An agent acting for one of the bidders said they regarded the investment as a "trophy building" which would raise the profile of any portfolio.

The Ulster Bank is paying a rent of £27,500 for the building under a 35 year lease which has another 12 years to run. The new owner can expect a significant increase in rent in 1999. The bank has the use of 1,165 sq ft and a further 530 sq ft at basement level.