Domhnaill O’ Sullivan, Savills Ireland, “We foresee an additional €450 million of property coming to the market in Q3 2013 which bodes well for turnover exceeding €1 billion for the year, a level which has not been reached since the highs of 2007”.
Savills Ireland started 2013 with approximately €240 million of investment property sale agreed and in legals with a further €200 million of stock available and having reached the half-way point in 2013, over 50 investment property sales have completed with transactions amounting to €610 million. This compares with a turnover of €170 million for the first half of 2013, a remarkable increase demonstrating the continued momentum which was witnessed in Q3 and Q4 of last year.
Domhnaill O’ Sullivan of Savills commented “While turnover for the first half of 2013 exceeded that of the entire of 2012, supply continues to be a problem in a market with no shortage of well capitalised buyers. Due to the level of competitive tension that exists at present, we forecast yield compression in the office and multi-family sectors whilst the second half of the year will also see an increase in the volume of retail investments coming to the market.”
Savills say it is evident from the marked increase in turnover that investors have renewed confidence in the Irish market, and there is strong demand from foreign buyers, particularly from the U.S., Germany, the U.K., Israel and Australia.
The top deals completed in the first half of the year included:
– the sale of Clancy Quay, a prime multi-family asset located adjacent to Heuston Station in Dublin 8 to Kennedy Wilson for a price in the region of €82 million providing a net initial yield of approximately 6.5%;
– the sale of The Gemini Portfolio, which contained three multi-family assets located in Dublin and Cork to the Comer Group for a price in the region of €65 million;
– the sale of Bishop’s Square offices in Dublin 2 to King Street, a U.S. investor for €65 million providing an initial yield of 9.8%; the German fund GLL bought 102-104 Grafton Street, which is occupied by River Island and Wallis, for €40 million / 6.9% initial yield;
– the sale of La Touche House, a prime office investment located in the IFSC to Credit Suisse for a price of €35 million and the sale of the Harcourt Building to Davy Target Investments for a price of €31.5 million.
An analysis of the turnover figures for the first half of the year shows who the buyers were with Private Irish / Irish funds acquiring €312 million / 51% of turnover; American’s were the next largest buyers acquiring €161 million or 27% of market share, and European’s acquired €81 million or 13% of market share.
In terms of asset classes, the majority of demand is for offices, with 48% of turnover in the first half of the year in this sector. Investors are chasing well located third generation offices, where it is expected prime rents will increase in the next few years due to a shortage of new office developments in the planning pipeline. There is increasing demand for apartmentblock sales, particularly where there is 100% ownership of the entire block. Multi-family deals completed in H1, which included the sale of Clancy Quay for approximately €82 million amounted to a total of €105 million.
Savills say the outlook for the remainder of the year remains extremely positive with approximately €75 million of investment property sale agreed with a further €320 million of stock currently available.
Domhnaill continued, “We foresee an additional €450 million of property coming to the market in Q3 which bodes well for turnover exceeding €1 billion for the year, a level which has not been reached since the highs of 2007”.