Expect city centre rentals to settle at around €65 per sq ft

Which sectors will be the most active next year?

Off shore investors will continue to invest for as long as the economic fundamentals remain compelling, which is the expectation for the next two years. Irish institutions account for significant proportion, with increased activity from private Irish investors. Demand will spread over a wider range of investor types.

The Dublin Landings agreed sale is proof of the depth of investor demand for the right product. At the quality end, investor demand will remain primarily focussed on Dublin offices, followed by the retail sector.

Have rents and yields peaked across the asset classes?

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Yields have continued to drift downwards at the prime end, creating a real gap between new and older stock and by location. Yields will stabilise in 2018.

Investors will be focused on rent review outcomes. These arise from earlier 2012 and 2013 lettings and can be expected to add to a positive picture of the performance of Irish real estate.

Where are the best opportunities at this stage?

2018 will be the settling down year for Dublin offices. Once occupier demand is maintained, the Dublin market will remain undersupplied for the next two years. Brexit benefit is hard to assess but will add further to demand. Expect rents to settle in 2018 around €65 per sq ft for traditional new city centre stock. Tenant demand for the south suburbs will increase, with headline rents expected to exceed €30 per sq ft for the best product.

Investor sentiment is more cautious in retail. The focus is on either core standing investments or value add in the same sector. Prices for this stock expected to grow further in 2018.

The fundamentals for neighbourhood shopping centres (with a good supermarket offer) remain sound. Lot size is not an issue. Quality retail parks are a target asset class for a lot of investors. The repositioning of shopping centres to include higher leisure content will gather momentum. Retailers are selective on growing their branch networks but there will be good opportunities.

One thing to watch out for in 2018?

The trend for a wider spread of demand over a range of the asset classes will grow next year. There will be more long-term investor demand for PRS (multifamily) and leased hotels. 2018 will be the year for more forward purchases once planning permission is in place.

Tony Waters is managing director of HWBC