New research suggests slumping investments in commercial property will hit Irish banks so hard that they’ll now be forced to make redundancies.

Research from Davy stockbrokers suggests the ‘golden age’ of commercial property is skidding to a halt, and that banks and developers are staring at a €30bn ‘black hole’.

Davy estimates that commercial property will dive by 20% from its peak, and is reducing its price targets by 8-18%.

More worryingly for those working in the sector, the report adds that employment in Irish financial services “may well drop” in 2009 as a result of banks’ heavy allocations to commercial property.

The three big players in the sector are Allied Irish Bank, Ulster Bank/Royal Bank of Scotland and Anglo Irish Bank.

Guy Hollis, managing director of real estate giant CB Richard Ellis, says a lot of Irish financial services staff are reliant on the commercial property sector: “Commercial property is a huge provider of jobs.”

New developments are still being built – with 110,000 square metres of office space in the first three months of this year. The problem is that no one wants to fill it: take-up has fallen 33% on last year, and only one in five new offices due to be unveiled in 2008-09 have secured tenants in advance.

In anticipation of a tumble in commercial property value, hiring has already slowed considerably, according to recruiters.

Davy’s predictions are a blow for Ireland’s financial services sector, which has so far been freezing recruitment in certain sectors, rather than laying off existing staff.