Value of offices continued to soften during first quarter of the year

These are among the findings of the authoritative MSCI/ SCSI index which monitors the performance of Irish property.

As signalled by a few recent office sales, the value of properties in this sector fell by 0.5pc in the quarter and by 4.8pc over the 12 months to the end of March, according to the Index for the first quarter of 2025.

Reflecting the impact of working from home on office demand, this sector has suffered each quarter since Q1 2022 bringing their overall decline in capital values to 28pc over the three years.

However, some of those offices built before 2010 have seen even sharper falls.

For instance, the 2007-built Beckett Building on Dublin’s north docklands is reported to have gone sale agreed recently for €25m which would equate to a 75pc loss on the €101m paid by KB Kookmin Bank, a South Korean financial group, when it purchased the building in 2018.

On the other hand, a much lower discount of only 18pc was seen when Central Quay offices in Dublin’s south docks was bought by a French investor in the first quarter of this year for about €42m. That vendor was Hibernia Property, an Irish subsidiary of Brookfield, a leading global alternative asset manager.

But recent office lettings are helping to restore hopes in the sector and returns for investors grew by 0.5pc in the first quarter of the year helping to pare back the decline in 12-month returns to 0.3pc.

Retail property values were practically unchanged in Q1, albeit as they slipped 0.1pc in the quarter and 2.7pc in the 12 months. This sector has seen declines every quarter since the fourth quarter of 2018 bringing their six-year decline to 40pc.

But at least retail investors have seen better returns than office investors in recent months with 1.6pc growth in the last quarter and 3.9pc growth during the last 12 months, due to recovering confidence in consumer demand.