What were the biggest commercial property deals of 2017?

Spend in the sector last year was lower than 2016 but 30% above 15-year average

The biggest deal of the year involved the Square Town Centre in Tallaght, Co Dublin, which was sold for €250 million to Oaktree Capital from Nama

The biggest deal of the year involved the Square Town Centre in Tallaght, Co Dublin, which was sold for €250 million to Oaktree Capital from Nama

 

Spending on commercial property last year was 30 per cent above the 15-year average in the Republic, according to a major report by real estate agent Savills.

The Investment Report 2018, which examines property investment across Ireland in 2017, found there was a total of €2.28 billion spent on commercial property during the year.

This represents a considerable slowdown compared with the year before, but that can largely be attributed to two blockbuster sales in 2016 when Blanchardstown and Liffey Valley shopping centres in Dublin propelled turnover to just under €4.5 billion.

By way of comparison, the two biggest transactions of 2017 totalled €395 million. Savills said the reduction in spending indicates that many investment properties are now in stable long-term ownership following four years of very brisk trading. A third of Dublin’s office stock and all six of its major suburban shopping centres have changed hands since 2013.

Large purchases

The proportion of sales outside Dublin increased from 14.2 per cent in 2016 to 18.4 per cent last year. Cork accounted for 8.2 per cent of all 2017 sales by value. This was partly due to two large purchases by German fund Real IS – the €45.5 million Capitol Building on Patrick Street and the €31 million M&S store on Merchant’s Quay.

The average investment deal fell from €15.3 million in both 2015 and 2016 to €8.84 million in 2017.

The biggest deal of the year involved the Square Town Centre in Tallaght, Co Dublin, which was purchased for €250 million by private equity buyers Oaktree Capital Partners.

In terms of investment by sector, offices enjoyed the largest share of turnover. Assets of €856 million were traded. It was a record year for Dublin office lettings with take-up of 316,595 sq m – 4.7 per cent above the peak set in 2015.

‘Sharp reduction’

The report highlighted the “sharp reduction” in office sales in Dublin’s central business district and south docks as “perhaps the most striking symptom” of the tightening availability of prime offices.

In terms of buyers, the report said there had been a “marked shift” in investor profile.

“From being absolutely inactive in 2012, institutions and REITs rose to become the dominant buyers in recent years,” it said. “Their share of turnover rose from 32 per cent in 2013 to almost three-quarters of the annual spend by 2016. However, this pattern reversed quite abruptly in 2017. Institutional/REIT investment fell from €3.32 billion to just shy of €811 million in 2017.”

Top 5 biggest deals of 2017:

• The Square Town Centre, Tallaght, Dublin: €250 million to Oaktree Capital from Nama

• Portfolio of eight office blocks in Cherrywood, Dublin: €145 million to Spear Street Capital from Hines

• 13-18 City Quay, Dublin: €126.3 million to Irish Life from Bennett Construction and Targeted Investment Opportunities

• The Gibson Hotel, Dublin: €90.2 million to Deka from Nama

• Gardner House, Dublin: €60 million to IPUT from Kennedy Wilson