€25.5bn flows into Irish property market in 2023 despite rise in borrowing costs

Sherry FitzGerald research finds headline figure reflects ‘resilience of demand’ in residential market

Higher borrowing costs fails to stem flow of capital, says Sherry FitzGerald in its latest report. Stock photograph.

The flows of financial capital into the Irish property market last year reached €25.5 billion, 6 per cent down on the €27.2 billion recorded in 2022, according to Sherry FitzGerald.

The estate agent noted this was “despite the significant rise in borrowing costs throughout much of the year and reflects the resilience of demand in the residential market”.

The €25 billion figure comprises the total spend on residential property, incorporating single asset transactions and multifamily or block sales, as well as commercial property including agricultural land and development land.

The residential spend, which encompasses all market transactions, residential investment and student accommodation, accounted for almost 90 per cent, or €22.9 billion, “relatively unchanged from the previous year”.


In contrast, capital flows into commercial property, which include all commercial property transactions and development land sales valued at €1 million or greater, as well as agricultural land sales, fell by a significant 41 per cent to €2.6 billion.

Sherry FitzGerald’s figures indicated that Dublin saw its share of capital flows decline to 46 per cent, or €11.7 billion, in 2023, “reflecting reductions in both residential and commercial spend”.

In contrast, Cork and Galway witnessed increased capital flows into commercial property during the year, while residential spend in these locations also increased. Cork accounted for the highest portion of capital flows outside of the capital at 10 per cent, or €2.5 billion.

“Although the overall flow of capital into the property market fell only moderately during 2023, the commercial market witnessed a particularly severe contraction as higher borrowing costs eroded returns and impacted the viability of developments,” Jean Behan, Sherry FitzGerald’s head of research, said.

“The downturn in the office sector, which is an integral segment of the commercial market, has also had a significant impact on commercial capital flows.

“Similarly, elevated construction costs and continued delays in the planning process augmented the impact of higher borrowing costs in the development land market.”

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times