Investment transactions in the property market will remain limited and it will continue to prove difficult to conclude deals until the banks pump funding back into the market and economic conditions improve, according to a new report from Colliers Jackson-Stops.

The firm reported that yields are being pushed out across all sectors, although a lack of investment market transactions in the first half of this year means figures are difficult to verify.

‘‘These are challenging times, with yields pushing out across all sectors,” said Michele McGarry, associate director at Colliers Jackson-Stops. ‘‘Investors are watchful of potential opportunities but as banks pull down the shutters on new lending it continues to prove difficult to conclude deals.”

She said distressed sales were not a feature of the market at this time. ‘‘The economy is slowing significantly as the household construction sector contracts and bank lending is curtailed, especially for residential development,” she said.

The Eurostat Irish GDP forecast indicates cooling growth from 5.3 per cent last year to 2.3 per cent this year, with a modest recovery to 3.2 per cent predicted for next year. The report states that the cooling is led by the contraction of the housing construction sector, weak household spending and limited export growth.

The euro base rate rose to 4.25 per cent in July as the European Central Bank sought to mitigate inflation risks with slower growth.

Colliers Jackson-Stops believes the ECB will maintain its hawkish stance and a household spending contraction will affect retail sales.

The firm does not expect any improvement in the residential property market until the financial institutions have regained confidence and begin to lend freely. In 2007 and now in 2008,the report states, the Irish residential market has fared worst of all, with prices back in some instances by up to 20 per cent.

Difficulties obtaining funding, along with builders and developers coming under pressure from the financial institutions, mean that building land values, particularly in rural locations, have and will continue to come under pressure.

There is evidence of up to a 50 per cent drop in value in some instances, with many sites being virtually un-sellable. For the retail market, Colliers has forecast that consumer spending will not increase this year and may show a small decline.

Rent increases are to slow, with provincial shopping centres and secondary city retail vulnerable, according to the report.

Retail development will slow also and new lettings, especially shopping centres, will be heavily incentivised with lengthy rent-free periods and generous capital contributions.

The report states that, in the first quarter of this year, retail sales volume (excluding the motor trade) fell 0.7 per cent and the monthly change from March to April showed a fall of 1 per cent.

Retailers are reporting flat sales and, in some cases, a drop, particularly in provincial town shopping centres, may of which are relatively new.

The report said there had been a huge upsurge in retail supply in the last ten years, not all of it quality development.

The office market experienced a phenomenal year in 2007 with the highest take-up ever recorded in Dublin, but the report forecasts the take-up figures for this year will be substantially less and will be determined by the actions of relatively few large occupiers.

‘‘The forecast looked positive for the offices market for the year ahead with strong take-up recorded in the first quarter of 2008.

‘‘However, with global economic conditions deteriorating, the sentiment in the sector is weakening,” said Nick Coveney, director and head of commercial at Colliers.

‘‘Until recently there hasn’t been a huge choice for occupiers either in the city centre or suburbs.

“But now with fewer tenants chasing the same buildings, it is becoming a tenants’ market.”