Investment spend hits €2.72bn following ‘very strong’ second quarter

The second quarter proved to be a very strong one for the Irish investment market with a total spend of €1.5 billion. By way of contrast, the amount invested in the equivalent period in 2020 came in at just €430 million, which was reflective of the near-standstill brought about by the emergence of Covid-19 at the end of the first quarter.

The total spend so far this year stands at €2.72 billion, with €1.22 billion invested in the first quarter. Once again, the half-year figure for 2021 reflects a dramatic increase on the same period in 2020, when €1.1 billion was spent. This equates to a 146 per cent increase in investment volume, comparing the first six months of 2020 with the same period in 2021.

Deals done

The largest deal in the latest quarter was in the private rented sector (PRS) market, with German investor Union Investment paying over €200 million to acquire the 8th Lock portfolio – a scheme of 435 apartments and a health centre being developed by Sean Mulryan's Ballymore Group at Royal Canal Park in Ashtown, Dublin 15.

The top three transactions in the second quarter were PRS deals and carried a combined value of €588 million.

Ardstone Capital pays €180m for 398 Dublin rental apartments

---

2K Games to pay €60 per sq ft for offices at One Park Place

---

Litigious nimbyism is making housing crisis much worse

---

Nama puts Finglas residential rental portfolio for sale at €14.5m

---

In terms of value, the average deal size for the period was €31.7 million with 47 deals valued at over €1 million. Unsurprisingly, the PRS sector accounted for the lion’s share of this with just over 50 per cent or €757 million of the spend. The industrial and logistics sector was next up, accounting for slightly more that 22 per cent or €324 million of the money spent in the second quarter. The office sector was the next most valuable category with €310 million or 21 per cent of the spend. The retail, mixed-use and other brackets accounted for approximate investment spends of €18 million (1 per cent), €10 million (0.6 per cent) and €73 million (4.8 per cent) respectively.

The largest office transaction in the second quarter was the sale for €164 million by Irish Life Investment Managers (ILIM) of block A Riverside IV, 70 Sir John Rogerson's Quay, at €164 million to German fund Deka Immobilien.

This represented a net initial yield of 4.08 per cent.

Outside capital

Outside of the Dublin market, the largest regional office deal in the period saw French investor Corum Asset Management acquire One Navigation Square in Cork city's docklands for €60 million in an off-market deal from O'Callaghan Properties..

On the retail side, the €6.8 million sale by New York-headquartered Marathon Asset Management of Lakepoint Retail Park in Mullingar to a private high-net-worth investor was the largest transaction to have taken place in the second quarter.

The industrial and logistics sector meanwhile remained one of the most desirable asset classes and had a spend of €324 million. The extreme shortage of stock in the sector coupled with the strong demand from a host of domestic and international buyers remains a challenge and will drive pricing even further.

Looking at the levels of activity and the value of investment in the second quarter, one can see that the market is well and truly back after a subdued 2020, due to Covid-19. Notwithstanding the fact that the travel restrictions necessitated by the pandemic remain in place, the market is strong. As such, we expect the investment spend for the third and final quarters to remain buoyant, given that a large number of opportunities are currently being prepared for sale. It’s particularly interesting to see the volume of industrial properties transacted overtaking the office sector. This reflects the sheer weight of capital now chasing this sector.

Michele McGarry is a director and head of capital markets at Colliers