Ireland’s commercial real-estate sector will see a rebound in activity in the second half of this year provided the Covid-19 outbreak is brought under control within a reasonable time frame, according to a new report from CBRE.
The recovery is expected to be led by the investment sector of the market, where there is “considerable investor equity in a position to deploy”, the property consultancy says in its latest bi-monthly report, to be published on Friday.
But while the report is largely optimistic, the longer-term consequences of Covid-19 are acknowledged.
Commenting on this, CBRE’s head of research Marie Hunt says: “The depth and duration of the pandemic will dictate the extent to which the real-estate market is impacted, and it is clear that in every sector of the market, the ‘new normal’ will be a very different place indeed”.
While the effects of the current Covid-19 lockdown are expected to see significant reductions in property transaction volumes in the second quarter, there were strong levels of activity in the period leading up to the coronavirus outbreak.
According to CBRE, take-up in the Dublin office market reached almost 100,000sq m in the first quarter – 50 per cent higher than the five-year average.
Looking at the current state of play in the office leasing market, CBRE says transactions have been put on hold “indefinitely as occupiers put off decision-making and adopt a ‘wait and see’ approach”.
Notwithstanding this, some 6,000sq m of office space has been leased in the capital since the Covid-19 lockdown commenced. In a further encouraging sign, CBRE says that investor demand for Irish assets remains strong.
“There is still considerable liquidity, meaning that when we are through this crisis and sales campaigns recommence, market activity is expected to rebound quickly in this particular sector of the market.”
The outlook for development land is less certain, with the appetite for sites “hugely dependent” on the availability and cost of funding according to the report.
While pricing in the private rented sector market remains stable, CBRE says differential pricing may emerge for existing stock versus forward-funded developments depending on the depth and duration of the crisis.