New figures just published by property consultants Savills indicate that Ireland’s commercial property investment is on-track for another €3.5bn year in 2015.
2014 set a record for the Irish market with over €4.5bn of income producing property assets traded. And while Savills say that this is unlikely to be surpassed in 2015, there continues to be strong activity in the market with close to €680m of tenanted property transacted between April and June. This brings the total investment spend for the first 6 months to over €1.7billion, only marginally down on last year’s H1 figure of €1.79bn.
Interestingly, while the value of investment turnover has remained relatively consistent, transactional activity has increased dramatically with the number of deals tripling from 33 in the first half of 2014 to 102 in the first 6 months of 2015.
Commenting on the figures, Fergus O’Farrell, Director of Investments at Savills; “The first 6 months of 2015 has been positive, not only because of the overall level of activity, but also because of the breadth and depth of market demand. We now have a wider and more diverse buyer pool to sustain the market with significant levels of turnover and volume”.
In this context Savills noted that it was encouraging to see a range of new entrants coming into the Irish market – these include the likes of German funds Patrizia, Union Invest and Real IS, all of whom have recently made their first acquisitions in Ireland during 2015.
Fergus went on to comment, “The presence of these core institutional investors is a vote of confidence from international investors and reinforces the contention that Ireland remains an attractive place to invest.”
Savills report that in Q2 only one portfolio sale, The Cornerstone Portfolio, traded for in excess of €100m, with the largest single asset sale being the Riverside 1 office investment which Savills sold for in excess of €80m to IPUT.
Savills commented that another change witnessed from earlier in the year is that Irish Investors dominated the investment landscape accounting for almost 53% of transactions, the main players being Irish Life, IPUT, Davy, Green REIT, along with a large number of Private Irish Investors.
The buyer mix in Q3 may see international investment becoming more prevalent in the market place, with larger sales currently on the market such as Block R, Spencer Dock and The National Portfolio likely to be of interest to foreign investors, coupled with the expected launches of a number of NAMA asset portfolio sales.
Investor focus by sector remained largely focused on Office and Retail investments accounting for approximately €280m and €259m respectively. Savills are reporting that geographically, focus over the last 3 months has not been restricted to the capital with over 52% of sales being assets or portfolios outside of the Dublin – with large transactions taking place in Cork, One Albert Quay and Kerry, Manor West shopping Centre.
Fergus concluded, “There is almost €900m worth of assets on the market as we move into Q3, and of this, product with an original guide price of over €316.3m is currently sale agreed or under offer. With this in mind the next 6 months of 2015 is shaping up to be a very busy period leading up to year end”.