Overall returns from the commercial property market reached almost 30 per cent last year. The results are considerably better than expected, as many of the major investors had been anticipating a more dramatic falling off from the record level of 39 per cent achieved in 1998.

The 29.4 per cent returns for 1999, posted by the Jones Lang LaSalle Property Index, means property has again out-performed Irish bonds and equities.

The London-based Investment Property Databank, which monitors a broader range of properties, is expected to file its results soon. Although the pattern had been for a gradual slowing in performance during 1999, the pace of change monitored by Jones Lang was slow. Overall returns in the final quarter of 1999 were 6 per cent, compared with 7.7 per cent in the first quarter.

Growth in capital values underpinned the strong performance. Values rose by 23.8 per cent during 1999, with offices taking a clear lead at 30.6 per cent growth. Office values rose by 6.1 per cent in the last quarter of 1999, showing a small but steady decline in each quarter of the year after ending the first three months at 7.9 per cent.

This pattern was repeated in other sectors, with retail values rising by 14.8 per cent in 1999, and by 3.2 per cent in the last quarter. Industrial values virtually mirrored the retail performance, with a 14.6 cent per increase during 1999, and a 3.4 per cent in the last quarter. Investment yields continued to improve throughout the year, but the scope for yield adjustments was reduced. The index calculated that rental values increased by 16.1 per cent across the portfolio in 1999, with the dominant performance again in the office sector. Office rental values increased by 23 per cent during 1999 and by 4.8 per cent in the last quarter. Headline rents continued to surge forward, according to Margaret Fleming of Jones Lang, and the effects were filtering down to rental values in older buildings.

Jones Lang reported rental values in the retail sector performed strongly, growing by 8.6 per cent in the year but slowing to 0.9 per cent in the final quarter of 1999. Industrial rental values put in a surge late in the year, rising by 2.2 per cent in the last quarter and by 4.6 per cent in the year.

The current income yield from the Jones Lang portfolio is at 4 per cent, with offices lowest at 3.8 per cent.