ABOUT €500 million worth of Irish commercial investment property transactions are in the pipeline, according to the latest review of the market by CB Richard Ellis (CBRE).
This includes the sale of the Liffey Valley retail centre in southwest Dublin, expected to fetch €350 million.
CBRE is advising on the sale of a portfolio of Irish Life offices, under negotiation with an overseas buyer for €52 million.
This is still some way off the frothy valuations of the Celtic Tiger boom when up to €3.6 billion worth of deals were being transacted annually. Just €92 million worth of deals were transacted in 2009 and just €19 million in the first three months of this year. “Due diligence tends to be quite forensic now, so it’s taking a while to complete deals,” said Guy Hollis, managing director of CBRE in Ireland.
The survey notes total returns from the Irish commercial property market in the first quarter of 2010 were positive for the first time in more than two years.
Latest data from the Investment Property Databank (IPD) shows that total returns in the first three months rose by 0.4 per cent.
The CBRE review also states that there is increased interest from investors in the hotel and pub sectors.
Chief O’Neill’s hotel in Smithfield has been sold for €8-€9 million to a London group. This was roughly half the price businessman Laurence Byrne paid for the 73-bed hotel just four years ago.
The former Spawell complex in Templeogue has been leased in recent weeks and will trade as Darcy McGee’s, while CBRE has secured a letting on The Viper Room pub on Aston Quay.
“To put this into context, one hotel sold in Ireland in the whole of last year,” said Mr Hollis.
“There are people who want to buy hotels but there is no finance available. On the pub side, there are people prepared to take them on a leased basis now.”
CBRE said rents on secondary industrial accommodation such as factory premises “continue to fall dramatically”.
But, overall, Mr Hollis said there are signs of an improvement in sentiment in the commercial property market here.
He said overseas buyers are being attracted by yields of between 7.5 per cent and 8.5 per cent. This is nearly twice the level of a couple of years ago and higher than the 20-year average of 6-6.25 per cent.
“We think that things are better and a corner has been turned,” he said. “It’s going to be a slow old plod upwards again, but rents and yields have stabilised.
“But the whole thing hinges on job creation. We have to create jobs to stimulate demand.”
