“Resurgence in investor activity as commercial property investment reaches €523 million.”
Statement by Sherry FitzGerald Commercial Research
Monday , July 8th, 2024
Sherry FitzGerald, Ireland’s largest estate agent, reported today (Friday, July 5th, 2024) that the Irish commercial property market witnessed a resurgence in investment activity during quarter two to reach €523 million. This follows a very weak quarter one, when investment turnover fell to €163 million, the lowest level on record. The number of transactions also rebounded with 34 sales closing during the three-month period, the highest number seen since the third quarter of 2022.
According to Jean Behan, Head of Research, Sherry FitzGerald; “Stronger market sentiment was evident during quarter two as lower interest rates, a more positive economic outlook and more favourable pricing set the scene for a recovery. This was highlighted by the increases in both the volume and value of investments coupled with the greater number of large-scale investments during the quarter.”
Retail remained the most active sector in quarter two attracting 27% of capital spend or €143 million. This was the highest quarterly level of retail spend recorded in two years and largely reflects a number of retail park transactions. The most significant was the acquisition of Mahon Point Retail Park in Cork by Corum for an estimated €50 million. A further two retail parks in Letterkenny and Killarney also traded during the quarter for a combined total of €40.5 million.
Office assets accounted for 16% of turnover during the quarter, equating to €81 million. This is compared to capital spend of almost €13 million in the opening months of the year. The most notable transaction was the sale of 40 Molesworth Street in Dublin 2 by State Street to Deka Immobilien for approximately €37.5 million. The LEED Gold accommodation drew interest from several international investors, highlighting the level of demand for modern high specification space in prime locations.
Residential assets also attracted close to €81 million of investor spend during the three-month period including the largest transaction of the quarter, comprising the off-market sale of a large apartment development in north Dublin for €70 million.
The quarter also witnessed renewed activity in the healthcare sector with almost €77 million transacted during the three-month period. This includes the sale and leaseback of a portfolio of three nursing homes in Portmarnock, Portlaoise and Kilkenny by Emeis Ireland to Healthcare Activos for €56.7 million.
Interestingly, there was a notable shift in the size of transactions that took place during quarter two. In particular, there was a significant reduction in the volume of transactions ranging between €1 million and €10 million during the period to 53%. This is compared to 80% the previous quarter and is below the long-term quarterly average of 63%. A further 21% ranged between €10 million and €20 million in size, well above the 12% average rate for the cohort. Approximately 9% of transactions were valued at €50 million or greater.
Commenting on market activity, Ross Harris, Director, Commercial & Residential Investment, Sherry FitzGerald said “Transactional activity across the broader Irish investment market should continue its recovery through to the end of H2, supported by a more positive economic outlook and a narrowing gap in vendor and purchaser pricing expectations. The re-emergence of significant PRS transactions in Q2 is a welcome development, indicating that institutional style capital remains committed to supporting the Irish residential rental market. However, it is worth noting that residential rent caps remain a significant issue for institutional investors seeking to invest in Ireland.”
Looking to the remainder of the year it is anticipated that investor confidence will continue to improve bolstered by at least one further interest rate cut. There were a large number of assets sale agreed at the end of the quarter which should translate into stronger levels of activity during the second half of the year. That said, it is unlikely that annual turnover will reach the long-term average this year.
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For any further information, please contact:
Jill O’Neill
PR Director
Sherry FitzGerald Group
Ph: 01 2376 500 / 086 252 3277
