A strong performance in the office sector has boosted the commercial property investment market in Ireland significantly in the first half of 2018.
Article by Robert McHugh on BusinessWorld.ie
A strong performance in the office sector has boosted the commercial property investment market in Ireland significantly in the first half of 2018, with transacted volume standing at €1.9bn, more than double the same period in 2017 and 4% above the half year average.
The new research by Lambert Smith Hampton finds that while overall activity has been healthy, it was a very mixed pattern across the sectors. The first half of the year saw €862.3m of investment into the office sector. Ninety percent of office volume was invested in Dublin, with two-thirds in the city centre area.
Headline deals in the office sector included the €175m Eir Headquarters at Heuston South Quarter (NIY 4.87%), the €164m Dublin Landings in the Docklands (NIY 3.94%) and the €101m Beckett Building on East Road (NIY 4.13%).
The alternatives sector, which comprises of investments in assets such as student accommodation, leisure, healthcare, hotels and car parks, continues to grow rapidly benefitting from a structural shift in investor behaviour. In H1 investment in alternative assets stood at €403.1m, accounting for 21% of investment volume. Most notably amongst the categories of alternative assets, a total of €359.5m was invested in the private rented sector.
Two €100m+ headline transactions completed, specifically the €101m 6 Hanover Quay, Dublin 2 (NIY 4.00%) purchased by Carysfort Capital and the €100m Fernbank, Dublin 14 (NIY 6.00%) purchased by Irish Life Investment Managers.
At €210.3m retail investment accounted for only 11% of total transaction volume, the smallest proportion since H2 2013. Retail investment was boosted by Deutsche Bank’s €147.7m acquisition of Westend Retail Park, Blanchardstown (NIY 5.30%).
Speaking this week, Head of capital markets in Ireland at LSH, Paddy Brennan said, “This year to date, there has been significant overseas investment in Ireland with a number of the highest value assets purchased by investors from the USA, Korea and Hong Kong. The attractiveness of Ireland, and more specifically Dublin office investments, shows little sign of slowing.”
He added, “Strong investor sentiment remains in the office sector and the shift to alternative assets continues. The outlook for the Irish commercial property market for the remainder of 2018 is positive.”