Commercial real estate investment drops to less than half Irish average

Investment in commercial real estate plunged between July and the end of September to less than half the average level for the Irish market.

Latest figures from broker CBRE show that the €444 million was spread across 30 transactions in the third quarter. That was well below the long-term quarterly average for the Irish market, of around €1.1 billion, the company added.

The firm said that the Irish commercial property market has averaged around €4.3 billion in investment each year for the past decade, although figures for 2019 and 2022 were significantly higher due to the sales of property groups Green Reit and Hibernia Reit.

In the first nine months of this year, the total spend on Irish commercial property was just €1.4 billion.

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CBRE have said that by the end of the year, it is likely the Irish market will see less than 50 per cent of the annual average of €4.3 billion in investment.

Office investment made up the largest proportion of spending in the quarter, at nearly 40 per cent of the total, while investment in retail property accounted for 33 per cent.

The largest single investment in the third quarter of this year was the purchase of office space at George’s Quay House, in Dublin 2, by French asset manager Corum for more than €80 million.

Other top deals included the sale of the Hexagon shopping centre portfolio for €74 million, and the sale of Marshes Shopping Centre in Dundalk, which The Irish Times understands was for about €29.5 million. Both were acquired by a fund managed by Davy Real Estate.

[ Price of St Stephen’s Green office cut 33% as it comes back to market at €18m ]

In the health sector, an Enhanced Community Care facility in Ballincollig in Cork was acquired by UK investment trust Primary Health Properties for more than €30 million.

Colin Richardson, head of research at CBRE Ireland, said that investment activity remains relatively low as European commercial real estate markets deal with higher interest rates.

“However, quarter-three transactional activity in the Irish market improved on the level seen in quarter two, and the number of large-scale deals that completed this quarter was particularly encouraging,” he said.

Mr Richardson said that private investors are some of the most active in the market, with French funds showing interest in the Irish market in the third quarter.

He added that while institutional investors are being selective in assessing investment opportunities, “there is continued appetite for investment into sectors such as offices, that are perceived to be out of favour”.