Commercial Property

International investors ready to spend on Irish property once prices fall

Funds remain optimistic for the future notwithstanding challenging debt markets and elevated interest-rate environment

While Dublin remains on the radar for international real-estate investors, vendors will need to reduce their pricing if they want to sell

Michele McGarry
Wed Oct 11 2023 - 05:35

The EMEA real-estate market is dominated by two key annual conferences, MIPIM (France, March) and EXPO (Munich, October). Both are attended by an enormous range of real-estate professionals, institutions, investors, bankers, financiers, developers, asset managers and private-equity players.

The mood music at these conferences is a barometer for real-estate sentiment. Last week some 39,000 people converged on Munich just following Oktoberfest ... and probably not unlike some of the Oktoberfest attendees, real estate was feeling a little delicate.

From an Irish perspective, our key objective is to meet international investors who have transacted or who are looking to invest in the Irish commercial real-estate (CRE) market. For the most part investors were pretty optimistic notwithstanding the challenging debt markets and tricky interest-rate environment. Almost without exception the coterie of funds we met are intent on further investment into the Irish market; however with recent declines in CRE values globally (across all sectors), they still see a degree of unrealistic vendor pricing in the Irish market, and repricing will have to go further for meaningful further investment in CRE.

The majority of buyers are sector-agnostic; however, interest is strongest generally in the hospitality, healthcare, student housing, industrial, medical and retail (supermarkets and retail parks) sectors. Offices with long unexpired lease terms and bulletproof covenants, ideally government or government related, are also desirable. Interest from a quite a few of the buyers was not concentrated only on Dublin and most are more than willing to look outside the capital for the right opportunities. Buildings that are seriously ESG-deficient or likely to require heavy capex in this front are out of favour.

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Michele McGarry, director and head of capital markets at Colliers

This was the first time we heard the term “Survive until ‘25″, although apparently it was coined at MIPIM. On the ground this didn’t quite tie in with the investor feedback we got; acquisition interest in Ireland will be very selective and quiet for the remainder of 2023, and if we can get realistic pricing, there should be accelerated activity from the first quarter of 2024.

What was very clear is that average lot sizes have come down, and investors are extremely cautious and demanding bit more bang for their buck.

Buyers view Ireland as a core international investment market and their intentions universally are to continue growing their presence here, with none indicating cautioning any cooling off towards Ireland or an appetite to get out.

To conclude, buyers won’t be exuberant, they are going to be cautious and insist on better value for money that means further repricing, but the good news is they are here to buy.

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