Commercial property transactions in Ireland are anticipated to increase, with up to $1bn of assets expected to be brought to market over the coming months.
According to CBRE Ireland’s bimonthly report for September 2020, the continued low interest rate coupled with unallocated capital positions means there is now considerable investor liquidity built up and looking to deploy into Irish real estate.
“Signs of increased activity will first become visible in the investment sector of the market, primarily as a result of the number of assets (predominantly multifamily properties), that traded during the Summer as well as those that are due to be offered for sale over the coming months,” said Marie Hunt, head of research at CBRE Ireland.
The report estimates that there will be a resumption in investment activity in Q3, but until travel restrictions are lifted and investors can assess opportunities, investment volumes will remain constrained.
However, a number of sales are currently bring conducted off-market, particularly in the multifamily sector, with a number of investment funds interested in opportunities to acquire units let to local authorities and housing associations, the report said. Additionally, prime yields in the Irish market, with the exception of retail, have been resilient over the recent months despite the pandemic.
Ireland’s office market saw the lowest quarterly take-up ever recorded in the capital in Q2 with only 106, 401 sq ft of transactions signed in the three month period. However, the report outlines that office take-up in Q3 shows a marked improvment on the last quarter.
The report highlighted that Ireland’s retail property market remains “largely paralysed” with vacancy rates continuing to increase.
Meanwhile, the research shows there has been an increased appetite for for industrial sites from data centre operators with these end users competing directly with developers of traditional industrial product for well-located land parcels in and around the M50 corridor and in some prime regional locations.
Hunt added: “We have visibility on up to €1 billion of assets that are likely to be offered for sale over the next few months, which will please the many investors who are looking to deploy. Recovery will however be slower to materialise in the occupier and development sectors of the market. There are a number of office and industrial leasing deals in legals, which will provide a welcome boost to these sectors following a disappointing Q2, although, for the most part, occupiers will remain reluctant to make significant expansion or relocation decisions for some time yet”