Irish retail property deal smothered by rental reforms

The €350m sale of the largest shopping Centre in Ireland has been killed off by a political battle that could have an impact on property markets across Europe.

A transaction agreed last year for F&C Reit Asset Management and Area Property Partners to buy the 475,000 sq ft Liffey Valley shopping Centre in Dublin from Aviva Investors and Grosvenor for €350m, has fallen through ahead of an election manifesto pledge by Ireland’s opposition parties.

Fine Gael and Labour have pledged to implement an immediate rent review on all Irish commercial property and retrospectively ban upward-only rent reviews if, as expected, they win an election to be held on 25 February.

Vast swathes of commercial property are likely to be “overrented” because of the Irish property bubble and, if the plans are introduced, it could cause rents to plummet and values to fall by up to 20%, reports the Irish Society of Chartered Surveyors.

The proposal is intended to ease rental burdens on struggling Irish occupiers, and protect jobs. But it would be disastrous for commercial property owners, who would see the value of their investments, which have already dropped sharply, further mauled.

Source: Property Week