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

Investors Looking To Divest Sizeable Capital Awaiting Launch of More Irish Investment Opportunities

Continued volume of transactional activity in all sectors of the market

Dublin, 1st May 2014 Commercial property consultants CBRE Ireland today released their latest bi-monthly analysis of trends in each sector of the Irish property market. According to their May bi-monthly report, following bumper activity being achieved in the Irish commercial property market during the first two months of 2014, March and April have proved equally busy with significant volumes of transactional activity continuing to be recorded in all sectors of the market.

To view Marie Hunt, Head of Research, CBRE Ireland discuss the latest bi-monthly research report Click here

According to Marie Hunt, Executive Director and Head of Research at CBRE Ireland,“Following a very busy start to 2014, there are a number of domestic and international investors with sizeable capital to divest who are eagerly awaiting the launch of more property investment opportunities over the coming months. There is particular appetite for retail and industrial investment opportunities. Unlike some other jurisdictions, there is good visibility on the extent of deleveraging that has yet to occur in the Irish market which coupled with improving economic indicators and rental and capital growth prospects is encouraging investors and developers alike”.

INVESTMENT

  • Many of the very large overseas entities that have been purchasing assets in the Irish market over the last 12 months are now primarily focussed on securing some of the large loan sales and larger asset portfolios that have been coming to the market and are therefore less interested in some of the smaller properties and portfolios being offered for sale
  • The weight of capital chasing property investment opportunities is continuing to drive yields down across Europe – a trend that is very evident in the Dublin market where prime office yields are now in the order of 5.0% and prime high street retail yields are in the order of 4.75%, according to CBRE
  • In addition to strong demand from US investors, CBRE have experienced an increase in demand from German investors for Irish opportunities over recent months with a growing appetite for retail and industrial opportunities in particular
  • NAMA’s recent decision to acquire the controlling interest in Dundrum Town Centre is to be commended according to CBRE who say that this will boost already strong demand for this trophy asset if it is offered it for sale later this year as anticipated
  • According to CBRE, considering the extent to which prime investment yields have contracted, the focus for the Irish REIT’s and the various overseas and domestic funds that are vying for opportunities in the Irish market is now firmly on securing value-add opportunities that offer the potential for generating higher returns


OFFICES

 

  • The overall rate of vacancy in the Dublin office market stood at 13.89% at the end of Q1 while the Grade A vacancy rate in Dublin 2/4 stood at a low of 3.2%, which according to CBRE explains why prime rental values in the Central Business District continue to increase
  • Rental growth prospects in the Dublin office sector are driving demand for development opportunities although there are as yet only two speculative office developments underway in the capital
  • According to CBRE, there are a number of examples where office rental values of more than €430 per square metre have already been paid in Dublin. However, the property consultants say that this has been for relatively small lettings of fully fitted accommodation with prime headline rates of €377 per square metre still prevailing
  • CBRE expect that the appeal of suburban offices will improve over the coming months as cost-sensitive occupiers such as those in the technology sector seek out more affordable accommodation options

 

RETAIL

  • There has been a considerable increase in demand for well-located retail premises over recent months, particularly in Dublin and other large population centres according to CBRE
  • With signs of improvement becoming increasingly evident in the retail occupier market and some signs of rental growth on the horizon, CBRE say that it will be interesting to observe investor appetite for the various shopping centres which are due to come the market around the country over the coming months


INDUSTRIAL

 

 

  • Although the industrial sector was disappointing in the first three months of the year, on the back of more positive economic activity, occupier demand in this sector more than doubled quarter-on-quarter
  • Prime headline industrial rents in Dublin remain stable at approximately €60 per square metre although CBRE expect this to increase over the coming months as the availability of good quality industrial accommodation along key transport networks declines further


HOTELS & LICENSED

 

  • Demand for well-located hotel properties and resorts remains strong according to CBRE with purchasers encouraged by attractive discount to replacement costs, strengthening domestic economic conditions, an improvement in the availability of debt and improving hotel performance figures
  • An escalation in the volume of deleveraging in the hotels sector is anticipated over the coming months with several well-known hotels & licensed premises expected to be launched for sale

DEVELOPMENT LAND

 

  • With Ireland's housing market recovery now broadening outside of Dublin; a scarcity of supply driving house prices and rental values in the capital and rental and capital growth emerging in some sectors of the commercial property market, the demand for prime development sites has escalated over recent months according to CBRE
  • The property consultants say that while there is expected to be an increase in the volume of land coming available for sale as the year progresses, large sites that can deliver scale are going to be in more demand than small infill sites that don’t have the capacity to facilitate the volume of house building now required to balance supply and demand in the Dublin housing market
  • A Government advisory body recently forecast that a minimum of 79,660 residential units will be required in urban areas over the next five years with almost half, or 37,581 units, being required in the Dublin region alone. This has fuelled demand for good housing sites and CBRE expect to see an escalation of this trend over the coming months
  • The property consultants say that the imminent adoption of the Strategic Development Zone (SDZ) in Dublin Docklands will go somewhere towards facilitating residential and commercial development in the capital with much of this development likely to come about through joint ventures

 

NORTHERN IRELAND

  • According to CBRE, over the last few months, the property market in Northern Ireland has effectively been on hold as a result of Project Eagle - NAMA’s recent sale to Cerberus Capital Management of their entire Northern Ireland portfolio. While this transaction was underway and indeed in its aftermath, the sale of several investment properties and portfolios were delayed as sellers and buyers alike tried to grapple with the potential implications of this transaction and other portfolio sales
  • Transaction volumes in both the occupier and investment sectors of the Northern Ireland property market were therefore subdued during the first four months of 2014 although activity is expected to improve over the course of the next few months according to the property consultants
  • Demand for prime investment opportunities continues to primarily emanate from UK institutions. In contrast to the Republic, were demand for retail property has increased significantly over recent months, investors in Northern Ireland who have been primarily focussed on retail opportunities over the last number of years are now focussing more on office investment opportunities
  • There has been some improvement in the availability of funding in Northern Ireland over recent months with favourable terms available on good quality property assets, even those offering less than five year income in some cases
  • Activity has improved somewhat in the retail occupier market over recent months with new lettings to Karen Millen, Mango, Joules, Bravissimo, Pepper Berry and Fatface agreed in Belfast in recent months
  • There is much excitement now building about the Giro D’Italia race which will be a significant boost for Belfast and the various towns it will pass through over the coming weeks.

 


CONTACT: Marie Hunt.marie.hunt@cbre.com

ENDS


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

 


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