Up to €3.2bn invested in commercial property last year

Institutional investors gearing up to target residential market, Cushman & Wakefield report shows

Residential property attracted significantly more capital last year with €654.3 million invested in the sector, up from €110 million the previous year.

Residential property attracted significantly more capital last year with €654.3 million invested in the sector, up from €110 million the previous year.

 

The residential property market attracted significant investment in 2018 but it was the office market that again dominated the interest of investors.

Research from real estate agent Cushman & Wakefield found that of the €3.2 billion invested across property asset classes in 2018, 45 per cent was ploughed into the office sector. And while Dublin attracted almost 90 per cent of this, investment volumes in the capital was highest in secondary and suburban markets, reversing a trend in recent years.

Residential property attracted significantly more capital last year with €654.3 million invested in the sector, up from €110 million the previous year. The average transaction size rose from €6.1 million to €27.3 million in the year.

Cushman & Wakefield chief economist Marian Finnegan said there was a substantial volume of forward commit transactions in 2018 amounting to around €600 million.

Investors

“With limited private rental sector (PRS) standing stock, investors seeking to secure product are using this alternative method to gain a foothold, or increase their existing holding, in the Irish PRS market. If one were to add such transactions to the traditional residential investment figure, it would see the volume of capital inflow into PRS rise to an impressive €1.25 billion,” she said.

In the office sector, Ms Finnegan noted the figures show the fifth consecutive year of take up volumes which were, again, driven by players in the technology sector including Google and Facebook.

Looking ahead to 2019, Cushman & Wakefield expects “another strong year for take up” with the level of demand forecast to drive prime rental growth of 4 per cent to €673 per sq m.

However, it is expected that residential will continue to attract “a lot of interest from investors”, most of which will be on a forward commit basis.