CB Richard Ellis report that approximately €41 million was invested in the Irish investment market in the last three months, bringing total investment for the first half of 2009 to €41.6 million. This compares to €392 million invested domestically during the same period last year.

While CB Richard Ellis say that there are signs of improvement starting to emerge in the investment sector in Ireland and the UK, they say that the occupier markets - namely the office, retail, industrial sectors - continue to find conditions “challenging”, with significant pressure on rents and capital values.

While transactions continue to be negotiated in all sectors, tenants are in a strong bargaining position in the current climate and are seeking out very competitive terms and conditions.

“The Government’s proposed ban on upward only rent reviews will do nothing to alleviate the difficulties these occupiers are facing in the current market as the proposed legislation is not retrospective and will only apply to new leases,” the consultants said.

CBRE says that take-up in the Dublin office sector in the second quarter of the year has been “considerably better” than the first three months of the year.

Prime headline office rents in Dublin satnd at approximatley €485 per square metre, having peaked at €673 per square metre in 2008. Rents have also fallen in the industrial and retail sectors of the market in recent months.

The property consultants say that until such time as excess supply in the housing and occupier markets is absorbed, funding for development land will not materialise in the Irish market.

“With at least 15,000 unoccupied housing units in the Dublin market; a high degree of housing oversupply prevailing outside of Dublin and vacancy rates in the key occupier markets in high double digits, it could take a number of years before any meaningful recovery emerges for development land, particularly outside of Dublin,” the consultants said.

The property consultants also say that overseas buyers now see the UK as being an attractive investment proposition. Demand for UK property is being led by German, US, South African and Middle Eastern buyers in recent months with strong demand for deals of less than £30m sterling.

It adds that Irish investors are not actively buying at the moment, but was watching developments in the UK investment market closely.

Regarding the hotel industry, CB Richard Ellis say that negotiations are continuing on a number of high-profile hotel sales at present.

They say that Ireland West region’s tourist industry received a great early season boost in recent weeks with it’s hosting of the Volvo Ocean Race in Galway but, in general, hoteliers are finding trading very difficult at a time when they would normally expect to be building up their cash reserves at the peak of the tourist season.

Although a number of UK and US indices are beginning to indicate some stabilisation in house price trends, CB Richard Ellis say that considering the lag effect inherent in the Irish data, it will be some time before we can see real evidence of the improvement in activity in the new homes market that is now starting to emerge.

CB Richard Ellis are critical of the Government’s announcement that measures are now being put in place to charge owners of holiday homes and investment properties an annual €200 tax saying that while they understand the rationale for broadening the national tax base, this measure would best have been left until later in the year until the Commission on Taxation announce their plans for an annual property tax.

Guy Hollis, Managing Director at CB Richard Ellis said: “While it will take some time before we can herald a recovery in the Irish commercial property market, we are definitely seeing renewed activity in some sectors of the market in recent months and are encouraged that transaction volumes will improve in the second half of 2009”.