Dublin,
30
June
2014
|
00:00
Europe/Dublin

Extraordinarily Strong Volume of Activity In The Irish Commercial Property Market

Transactional activity expected to continue at pace in the second half of 2014. Dublin, 1st July 2014 – Commercial property consultants CBRE Ireland today released their latest bi-monthly analysis of trends in each sector of the Irish commercial property market. According to their July bi-monthly report, the first six months of 2014 have seen strong volumes of activity being recorded in all sectors of the market as the Irish commercial property sector moved firmly into recovery mode.

To view Marie Hunt, Head of Research, CBRE Ireland's YouTube video discussing the latest bi-monthly report Click here

Please see link further below to download a pdf copy of the full July 2014 Bi-Monthly Research Report.


According to Marie Hunt, Executive Director and Head of Research at CBRE Ireland, “We have witnessed an extraordinarily strong volume of activity in the Irish commercial property market over the last six months and there is nothing to suggest that the pace of activity will ease over the coming months, with several large assets and portfolios due to be offered for sale during the second half of 2014. While many private equity investors are likely to become less focussed on the Irish market as the cyclical recovery continues to gather pace, we continue to see new entrants emerging and much of the new wave of appetite is emanating from longer term institutional investors with lower return expectations, which is encouraging”.

INVESTMENT

  • The pace of yield contraction witnessed in the Irish market in the second half of 2013 and early part of 2014 has now started to ease somewhat with prime yields remaining stable over the last number of months.
  • Continued sales activity is expected in the investment sector over the course of the Summer months and into the Autumn with several large assets and portfolios (including some further retail investment opportunities) expected to be formally offered to the market.

OFFICES

  • • Prime headline quoting rents in the Dublin 2/4 Central Business District increased by 25% last year and have increased by a further 15% during the first half of 2014, currently standing at approximately €430.50 per square metre (€40 per square foot) – a level CBRE had expected they would reach by year-end as opposed to the mid-year point.
  • The imbalance that currently exists between supply and demand in the Dublin office sector is likely to worsen until such time as new supply comes on stream which has the potential to put further upward pressure on prime rental values.
  • A number of office occupiers are now seriously considering the option of locating in good buildings in more affordable suburban locations as an alternative to the city centre.

RETAIL

  • Buoyed by the strength of occupier activity and improving economic conditions, there has reportedly been strong interest from investors in many of the retail shopping centres and retail parks that have been offered for sale in recent weeks and months.

INDUSTRIAL

  • Prime industrial rents in Dublin increased slightly during Q2 and now stand at approximately €62 per square metre or €5.75 per square foot. This is the first increase in prime rents in the industrial sector in 6 years.

HOTELS & LICENSED

  • CBRE Research shows that a total of 27 hotel properties (excluding those sold as investments) totalling €132.3 million sold in the Irish market in the first half of 2014, compared with a total of 13 transactions totalling approximately €48 million in the same period in 2013.
  • There is likely to be an increase in the volume of hotel properties being formally launched for sale over the coming months with some further portfolio sales anticipated which will see transactional activity in this sector showing a very dramatic year-on-year increase.

DEVELOPMENT LAND

  • According to CBRE Research, 54 development sites totalling more than €203 million have traded in the first six months of 2014 compared with 39 transactions totalling almost €111 million in the same period last year. Indeed, the volume of development land sales achieved in Ireland during the first six months of 2014 was higher than that achieved in this sector in the entire year last year. The outturn for the year as a whole could be significantly boosted if some larger tracts of land such as Cherrywood in South Dublin or some land portfolios are released for sale as expected over the coming months.
  • Much of the development land being traded in the Irish market at the moment continues to comprise relatively small lot sizes which are being released on an ad-hoc basis.
  • There has been a notable improvement in pricing for well-located sites with bidders factoring in expected rental and capital appreciation into their bid prices.
  • A trend that has become increasingly evident in the development land sector over recent months is the emergence of various consortia in the bidding process. Most comprise entities made up of domestic investors and developers in conjunction with overseas investors or private equity funds that combined have considerable fire power to purchase land and provide much-needed development at this point in the cycle.
  • CBRE say they are encouraged by an improvement in the availability of development funding and working capital to facilitate development which has recently started to emerge.
  • The focus in the development land sector over July and August will be to complete transactions agreed over recent months with a surge in transactional activity in this sector anticipated in the Autumn, fuelled by the need to get transactions completed by year-end to avail of the Capital Gains Tax (CGT) waiver, which is due to come to an end in 2014.

NORTHERN IRELAND

  • There is clear evidence of a greater depth of buyers in the Northern Ireland investment market over recent months, including many new US investors, many of whom are frustrated at the scarcity of prime investment opportunities coming available for sale in the region.
  • Prime yields in Northern Ireland have contracted over the last few months due to the weight of money chasing property in the region and are expected to trend stronger over the course of the coming months.
  • Although there are a large number of active requirements for office accommodation in Belfast it is taking some time for this demand to translate into lettings. To some extent, this can be attributed to a lack of supply of good quality office accommodation in prime locations.
  • There has been considerable activity in the retail sector in Northern Ireland over recent months although most of this activity has been focussed on Belfast.

ENDS
CONTACT: Marie Hunt – 00 353 (0)1 618 5543 / 00 353 87 2727115 or e-mail:marie.hunt@cbre.com

About CBRE Group, Inc.

CBRE Group, Inc. ((NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.eu

In Ireland, with offices in Dublin and Belfast, CBRE is the country’s largest commercial real estate services company, now employing over 130 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, debt advisory, project management, consultancy, valuations and research. Please visit our website at www.cbre.ie or www.cbre.ie./ni


CBRE | Ireland Bi-Monthly Research Report July 2014