Turnover in Irish commercial property market drops to €2.3bn for 2017

Strong final quarter of 2017 flatters figures but turnover is still at elevated levels

The Gibson Hotel in Dublin: one of the major transactions of 2017

The Gibson Hotel in Dublin: one of the major transactions of 2017

 

A strong final quarter boosted turnover in the Irish commercial property market to a respectable €2.3 billion for 2017. While down on 2016, the total still comfortably surpassed long-run averages.

This is according to fresh research by agent Cushman & Wakefield that points to 209 deals in the investment market last year. A key feature of the market was a greater emphasis on smaller lot sizes, single asset transactions and off-market deals while activity outside of Dublin experienced a substantial uplift.

Turnover was flattered somewhat by 64 deals with a combined value of €1 billion in the last quarter. The standout Q4 transaction was the sale of The Square centre in Tallaght for about €233 million and Keka Immobilien’s purchase of the Gibson Hotel in Dublin for €87 million.

“Dublin continues to attract the weight of capital entering the Irish market, absorbing 82 per cent of 2017 turnover,” according to the agent. “But 2017 also proved a significant one for investment outside of the capital where a combined €274.1 million transacted in the regional centres of Cork, Galway and Limerick – the highest value recorded over the past five years.”

The office sector, accounting for 40 per cent of turnover or €901.4 million, is the dominant segment of the market and this, in turn, is centred on Dublin where €840.4 million of office transactions occurred.

‘Marked uplift’

Retail accounted for nearly 691 million of turnover, according to the agent, while the industrial sector experienced a “marked uplift” in investment volumes. “The year-end total for the sector stood at €148.2 million, rising from €90.7 million in 2016,” says the agent. “The lagged recovery in the industrial occupier market is now providing stronger fundamentals, which is enhancing investor appetite in the sector.”

Cushman & Wakefield projects turnover this year “to remain akin to 2017” but, just like 2017, the final quarter of 2018 is expected to be the key period for activity. “The market should also see an increase in supply, led by the changes to the capital gains tax holding period in Budget 2018,” says the agent.

Jonathan Hillyer, director of investments at Cushman & Wakefield, says the investment market took “a breather” in 2017 after “years of heightened activity”. This is a positive, he suggests, for the short to medium term health of the market, as “pricing remains competitive compared to other European markets”.

Looking ahead, Mr Hillyer points to institutional involvement in large scale residential investment as a sector to watch.