More than €2bn invested in commercial property market so far this year

More than €2 billion was invested in the Irish commercial property market in the nine months to September, driven in the main by activity in the office sector, new figures show.

The data from commercial property company Cushman & Wakefield, shows transactions in the third quarter reached more than €505 million across 46 deals, bringing the year-to-date total to €2.1 billion.

Occupier activity in the office sector continued to record robust levels of take up, accounting for more than half of capital inflow.

About €1.1 billion was transacted in the asset class, with both the total value and volume of deals significantly up compared with the first nine months of 2017.

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Dublin was the focus of office investment, as investors looked to both the central business district and the wider market. In the year to date, just under €518.6 million was transacted in the secondary and suburban markets.

Office transactions of note during the third quarter included Belfield Office Campus in Dublin 4, which was purchased for €90 million by Spear Capital; and New Century House in the IFSC, which was purchased by Credit Suisse for €65.3 million.

Credit Suisse also purchased the Sharp Building in Dublin 2 for €56.3 million. The office block completed construction in the opening quarter of 2018 and is signed to American pharmaceuticals company Perrigo.

Buoyant performance

Cushman & Wakefield director of investments Jonathan Hillyer said the market was continuing to “perform strongly”.

“After the buoyant performance of rental growth and yield compression in recent years, the story of 2018 is more one of stability, most notably in the Dublin office market,” he said.

“The combination of this renewed stability and the positive outlook for the Irish economy will position Ireland well in the international markets.

“Notably, now eyes are turning to ‘value add’ or opportunities outside the core, and this is evident by increasing investment spend in both the secondary and suburban Dublin office market and the regional centres.”

Outside of the office sector, mixed use, residential and retail assets accounted for 14 per cent, 13 per cent and 13 per cent respectively in the year to date.

About €268.1 million worth of transactions occurred in residential investment during the three quarters. A further €203.4 million was signed or sale agreed at quarter end, suggesting the sector will see a strong closing quarter.

In terms of location, Dublin accounted for 81 per cent of capital spend in the year to date, accounting for seven out of the top ten largest deals during the time period.

Regional investment

A combined €326.5 million worth of capital was invested in Cork, Limerick and Galway in the nine months to September. This was significantly above the €274 million recorded in the regions for 2017 as a whole.

Regional investment was primarily led by Cork, which saw almost €208 million transacted. This also surpassed 2017 volumes. Investment in Cork was dispersed largely between office and residential assets.

Transactions of note included the sale of the Elysian to Kennedy Wilson for €87.5 million; the off-market sale of the Crescent and the Quadrants, Ballincollig, for €35 million to a private UK Fund, and the acquisition of City Square, Blackpool, also to a private UK fund, for €33 million.

Looking to the final quarter, about €435.5 million was sale agreed at the end of September.

This included a number of large transactions such as the Grange, Stillorgan, signed for a reported €126 million; No. 2 Dublin Landings sale agreed for €98 million; and the Belgrave Collection, sale agreed for €60 million.

Close to €1 billion is also estimated to have been available on the market at the end of September. Estimates for year-end turnover suggest volumes will range from €2.7-€2.8 billion, with the potential to reach €3 billion if large off market transactions occurred.