Investment Volumes Low But Momentum Building And Sentiment Shifting

CBRE Ireland today confirm that a total of €162 million was invested into Irish commercial property in Q1 2024, spread across 20 transactions. Although this is the lowest quarter of spend since 2012, this is not reflective of the level of activity across the market.

• Investment volumes are expected to be considerably higher in the latter half of the year, with several notable sales processes progressing well across the shopping centre, supermarket, residential and industrial sectors, alongside notable prime and secondary Dublin city office sales.
• We continue to see renewed investor interest in the retail sector, with retail assets attracting the most capital in Q1 (43% of spend). The sale of two retail parks completed in the last quarter, including the sale of Kilkenny Retail Park to Iroko Zen for approx. €25m. Considering ongoing sales processes, retail is on course to be the most invested sector in 2024 for the first year since 2016.
• The largest office deal of the quarter was at 21-24 Capel Street, which sold for approx. €16m to Inter Gestion REIM, bringing the proportion of investment spend into the office sector to 18%.
• While office investment spend was below the historical level this quarter, volumes are expected to pick up later in the year with several notable receivership sales ongoing. Feedback from investors across Europe indicates that secondhand offices, on a selective basis, are now pricing attractively, with many investors, particularly those with equity, believing that now is the right time to be acquisitive.
• The largest transaction in Q1 was in the residential sector, with the sale of 104 fully leased rental units at Shackleton Park in Lucan to KGAL, a German institutional group, at a sale price of over €42m.
• Another similar multifamily investment opportunity has just been launched to the market, Kilcarbery Square, which consists of 115 stabilised rental units, also in west Dublin. The guide price is €50m and the process is expected to attract strong interest.
• Yields and valuations for properties in sectors such as: industrial & logistics, hotels, supermarkets and retail warehouses/parks are all now stabilising, with strong occupational fundamentals, higher investor interest and a lower cost of capital generally available for purchases in these sectors.
  
  

According to head of research at CBRE Ireland, Colin Richardson, “despite the low level of investment spend this quarter, there has been a definite lift in sentiment across European real estate investment markets. Considering ongoing large-scale sales processes in the Irish market, we expect transaction volumes to be considerably higher in Q2 and H2. Given impending interest rate cuts, yields and valuations in certain property sectors are now starting to stabilse, which again will be supportive of further transactional activity.”

Kilcarbery Square, Clondalkin, Dublin 22