Commercial property prices have fallen by 67% since their peak and are now at the bottom of a deep cycle, according to Goodbody Stockbrokers.

A new report from the firm claims that commercial property prices are 25% lower than 1983 levels in real terms and at 1998 levels in nominal terms.

A lack of quality stock in key locations means that there is potential for strong growth in the Dublin office market, it says, however other areas face fundamental challenges.

Goodbody says that the retail sector remains the weakest of all commercial categories, with yields and values continuing to fall sharply this year.

It says that attractive yields in retail and counterbalanced by low levels of consumer spending, as well as a shift to online and out-of-city locations.

However it notes that industrial rents “have grown for two consecutive quarters and there is a notable pick-up in transactions”, saying that there were “reasons to be cautiously optimistic on the sector.”

In the residential market, it says that property prices have fallen by 50% but are now returning to growth, led by major urban areas.

It predicts an increase in construction activity in the coming years, driven primarily by a rise in demand for housing in Dublin and the surrounding areas.