Irish commercial property total return has avoided negative territory for the first time since Q1 2010, posting 0.0% in the first quarter of 2011, according to the SCSI/IPD Ireland Quarterly Property Index.

The neutral return can be traced to a slowdown in capital depreciation. While capital movement in Q1 remained negative at -2.3%, this was an improvement on the -3.3% posted in the last quarter of 2010. Falling rents continued to be the main undercurrent of capital decline, but a slowing in the first quarter, at -3.4%, up 150 basis points from the -4.9% recorded in Q4 2010, led to the lower capital depreciation. Rental values have now fallen a cumulative -39.5% since December 2008. Yield impact, which measures the influence yield movements have on capital values, remained negligible at -0.2% for the first quarter.

'2011 has seen a moderate easing in the negative factors affecting Irish commercial property, but continuing economic uncertainty is stifling any full blown recovery in the market,' said Phil Tily, IPD director for UK and Ireland. 'The moderate easing in rental value decline has led to a slowing in the rate of capital depreciation in the market. While there is still a long to go for Irish property, it is encouraging to pick up on improving themes.'

Returns at the sector level remained muted. While Offices and Industrials managed to edge into positive territory, with returns of 0.5% and 0.3% respectively, Retails remained off the pace with a negative -0.6%, their values down -2.7% over the quarter. All three sectors saw a reduction in levels of rental value decline. Slowdown was most marked in the Retail sector, down from -4.9% to -2.9%. By comparison Office rental values fell by -3.6% and Industrials by -4.6%.