Irish spend under €100 million at home and €1.8 billion overseas in first quarter of 2007

Market Research New research from Jones Lang LaSalle suggests that, while there is no shortage of Irish money chasing commercial property investments, there is very little product on offer at home

Approximately €98.5 million was invested in the Irish commercial property market in the first quarter of 2007, according to an analysis by Dr Clare Eriksson, head of research at Jones Lang LaSalle in Dublin.

This level of investment is substantially lower than that recorded for Irish investment in any of the four quarters in 2006. However, €1.8 billion was spent overseas by Irish investors between January and March of this year.

The statistics portray a drop in national property investment activity but the outlook for local investment turnover in the year still remains positive, says Dr Ericsson. The number of players willing to invest in the market has not dropped but the level of good investment opportunities has.

Jones Lang LaSalle estimate that there is currently €10 billion of Irish investment money seeking a home and that this will drive both national and foreign investment in commercial property in the year.

If suitable Irish opportunities present themselves, a large share of this money will stay in Ireland; otherwise the agency predicts that more Irish investor money will go abroad. It is likely that two further bank branch portfolios will be brought to the market in the second quarter which may boost Irish investment turnover in the year.

Commercial property continues to offer investors one of the best returns compared to other investment vehicles and, when compared to equities, is seen to be a relatively stable medium in which to invest, says Dr Ericsson. "This point is reinforced when we review the performance of Irish equities for the first few months of 2007. As with most worldwide equities, Irish share prices have fluctuated widely in reaction to uncertainty over the stability of the US sub-prime housing market. Equity sector analysts have reported that approximately €11 billion was wiped off the value of Irish equities in just a couple of weeks."

Jones Lang LaSalle says that the largest national deal for the first quarter of the year was the €47 million sale of Carrisbrook House on Pembroke Road. Almost all of the investment transactions (93 per cent) in the quarter were located within the greater Dublin area. The office sector was the most popular sector in the quarter with 60 per cent of all national monies invested.

On the European and international investment platform the majority of investment (40 per cent) was for UK property (€734.2 million). A further 32 per cent of Irish investor money (€579 million) was invested in Germany.

The remainder of investment was for the more mature and traditional property markets of Sweden, France, Belgium and the Netherlands. Although Irish investors did target the US commercial property market, this only represented 2.5 per cent of investor turnover in the quarter.

In the first quarter of the year, Irish investors primarily targeted foreign investment opportunities within the office sector (€840.5 million) and the retail sector (€448.5 million).