2017 saw the fifth consecutive year of above trend turnover in the Irish investment market. €2.3bn transacted in the twelve-month period and although, volumes were down, as much anticipated, it considerably surpassed the long-run average. Approximately 209 deals occurred, reinforcing the continued health of the present market. Smaller lot sizes, single asset transactions and off-market deals were a key feature of the year, while activity outside of Dublin also experienced a substantial uplift.
The 2017 total was significantly boosted by a strong closing quarter. In the three months to December, almost €1bn transacted across 64 deals. The most high-profile sale of the quarter was The Square Towncentre, Tallaght. The shopping centre was acquired by Oaktree for a reported €233m, also making it the largest transaction of 2017 as a whole. Other deals of note in the quarter included an off-market Dublin business park acquired for €145m and The Gibson Hotel, Dublin 1, acquired for €87m by Deka Immobilien.
Dublin continues to attract the weight of capital entering the Irish market, absorbing 82% of 2017 turnover. However, the year also proved to be a significant one for investment outside of Dublin. A combined €274.1m transacted in the regional centres of Cork, Galway and Limerick the highest value recorded over the past five years.
Market intelligence suggests investors have become more comfortable with the regional markets. The strengthening regional economy and upward rental pressure in the occupier markets has provided an attractive environment for the right asset at the right price. Given the smaller profile of lot sizes, investment in the regional centres has mainly consisted of domestic investors, however, overseas capital is also at play. A prime example is the acquisition of The Capitol, Grand Parade, Cork, by German investment fund Real IS for €45.5m in Q3 2017.
Robust demand in Dublin’s occupier office market in 2017, which saw take up sit on par with the previous peak in 2007, resulted in the office sector dominating investor focus. Approximately €901.4m or 40% of the year’s turnover sought an office asset, of which over €840.4m was acquired in Dublin. The retail sector followed, achieving €690.9m in total. The Square Towncentre, Tallaght, represents a substantial portion of this, however, activity in high street/unit shops and off-market transactions also played a pivotal role in the sectors performance.
As suggested in the previous quarters this year, the industrial sector experienced a marked uplift in investment volumes in 2017. The year-end total for the sector stood at €148.2m, rising from €90.7m in 2016. The lagged recovery in the industrial occupier market is now providing stronger fundamentals, which is enhancing investor appetite in the sector.
Looking to the year ahead, turnover is anticipated to remain akin to 2017, with the possibility of this rising if a number of larger assets come on stream. The latter half of the year, and in particular the final quarter, is again expected to be the key period for activity. The market should also see an increase in supply, led by the changes to the capital gains tax holding period in Budget 2018.
“2017, as expected, saw the investment market take a breather after recent years of heightened activity. This is a positive for the short to medium term health of the market, as commercial pricing remains competitive compared to other European markets. 2018 looks set to be another positive year, on the back of a strong economy, positive tenant and investor sentiment and prudent finance solutions keeping pricing realistic. Institutional involvement in large scale residential investment could be the sector to watch, in what is a relatively new sector to the market.”
Jonathan Hillyer, Director, Investments, Cushman & Wakefield.
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Cushman & Wakefield is a global leader in commercial real estate services, helping clients transform the way people work, shop, and live. The firm’s 43,000 employees in more than 60 countries provides deep local and global insights that create significant value for occupiers and investors around the world. In Ireland, the firm has 4 wholly owned offices in Dublin, Limerick, Galway and Cork. Its core services include: agency leasing, asset services, capital markets, facility services, global occupier services, investment management (branded DTZ Investors), project & development services, tenant representation and valuation & advisory. To learn more, visit www.cushmanwakefield.ie or follow @CushWake, @CushWakeIRL on Twitter.
About Sherry FitzGerald Group
Since its foundation in August 1982, the Sherry FitzGerald Group has grown from a small fledgling company in one location to a nationwide, diversified business operating in 97 different locations. Sherry FitzGerald Group currently employs 650 people across a diversified residential and commercial property business and remains an Irish privately owned business committed to continuing to lead the marketplace as it has done over the last 32 years.