Solid start to 2015 as first quarter turnover comes in at almost €1bn

New research from agent JLL suggests the Irish property investment market got off to a solid start this year with almost €1 billion transacted in Q1, while take-up during the quarter in the office market reached 31,578sq m (339,901sq ft).

The investment spend was boosted by the sale of two portfolio sales greater than €200 million. The largest was Project Molly – which includes Iveagh Court in D2, The Watermarque Building in D4 and Marsh House in D2. It was sold by Lonestar for €350 million.

"This sale is evidence that opportunistic purchasers in the last 24 months are starting to sort through their purchases and recycle them back on to the market," according to head of research at JLL Hannah Dwyer.

Q1’s second largest transaction was the sale of the trophy Nama assets, Block 4 and 5 Grand Canal Square, for €233 million.

JLL says 95 per cent of investment transactions were for Dublin assets while 93 per cent of total volumes were for offices with retail at 4 per cent and mixed-use at 2 per cent. “Whereas 2014 was the year of the portfolio sale,” says Dwyer, “Q1 has only seen two large portfolio transactions, with the rest of activity dominated by single asset sales. We are forecasting that total volumes by the year-end could achieve in excess of €3 billion.”

Overseas investors dominated the market in Q1 accounting for 80 per cent of volumes. Foreign investors such as Starwood Reit, Union, Hines, Standard Life, Credit Suisse and SW3 purchased Irish assets in the last three months.

“It is notable that a significant number of these players are new to the market and are core-style investors rather than just the opportunistic funds, which have dominated the market recently,” says Dwyer.

Office market

Meanwhile, take-up in the office market in Q1 was a little down on the previous quarter but it’s worth pointing out that take-up in Q4 of 2014 was at record levels.

The number of deals (45) in Q1 was comparable to the average quarterly total last year (48), but there was only a few large-scale deals in Q1 while the average deal size was smaller.

“Inquiries from occupiers remain focused on prime city-centre space,” says Dwyer, “but tightening supply is forcing occupiers to consider less-central locations. This quarter, we have seen the suburbs outperforming the city centre in terms of take-up (56 per cent). The largest deal, a 28,180sq ft letting to Paraxel at 1 Kilmainham in Dublin 8, boosted suburban take-up while six of the top 10 largest deals in the first quarter of 2015 were in the suburbs.”

IT was the most active sector with 36 per cent of deals and, with telecommunications, new media and media and publications, this makes up 49 per cent of all deals.

Fionnuala O’Buachalla, director of tenant rep at JLL, says: “What is interesting is that the level of stock reserved for Q2 is already in excess of 385,000sq ft, suggesting it could exceed 500,000sq ft by the time existing and new deals sign.”