Active Autumn in Prospect for Irish Property Despite Brexit, Budget & Global Slowdown Fears - Construction Network Ireland - Construction Network Ireland

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Published in Commercial Property on 02/09/2019

Active Autumn in Prospect for Irish Property Despite Brexit, Budget & Global Slowdown Fears


CNI Editor reports

CBRE Ireland today released their latest bimonthly property market report for September 2019. According to CBRE, the occupier sectors of the Irish market remain robust despite concerns about the global economy and the possibility of a ‘no deal Brexit’, which have heightened since the election of Boris Johnson as the UK Prime Minister in July.

The property sector will be on alert over the next two months to determine what implications Brexit and Ireland’s forthcoming Budget on October 8th will have for the Irish economy and in turn the property sector. 

According to Marie Hunt, Executive Director & Head of Research at CBRE Ireland “Despite all the noise, recent guidance from both the Federal Reserve and the European Central Bank suggests that interest rates are now likely to remain low for a longer period of time than originally anticipated, which in turn bodes well for continued investment in the real estate asset class where income returns look attractive in relative terms, particularly in light of Government bond movements over the Summer. As the Autumn season commences, agents in all sectors of the market are confident about prospects for the rest of the year but all are expressing frustration at the backlog of transactions that are awaiting completion, which is being attributed to delays in legals and the complexity of some of the transactions that are underway in various sectors of the market”.


  • In addition to several sizeable investment transactions that are at various stages of negotiation or legals in the Irish market at present, the completion of the recently announced Green REIT plc sale to new entrant Henderson Park for €1.34 billion later this year will provide a significant boost to investment spend in what has already been a busy year, with almost €2.1 billion of investment assets having traded in the Irish market in the first half of 2019.
  • Considering the strength of underlying occupier activity, investor sentiment remains very positive with appetite heightened by the very significant yield premium that Irish real estate currently offers compared to other forms of investment, particularly taking anticipated interest rate changes and recent Government bond movements into account.
  • The depth of buyers for retail assets is clearly thinner than it was 12 months ago but vendors expectations are realigning and where pricing is sensible, we continue to see buyers selectively looking at assets in the sector. The bulk of investor demand is however focussed on the office, industrial and residential sectors where rental growth prospects are better.
  • There is particularly strong depth to investor appetite for lot sizes ranging between €20 million and €50 million at present and good demand for smaller lot sizes, which are priced appropriately.  The buyer profile for large lot sizes over €100 million is somewhat different with strong Asian appetite continuing to prevail, although the complexity of these transactions is adding significantly to the length of time it takes to complete transactions.


  • Following a busy first half to the year, during which more than 150,000m2 of office leasing activity was recorded in Dublin, the office market paused for breath during August. This is symptomatic of the time of year but also reflects the complexity of some of the larger transactions and pre-lettings that are underway in the market, which take some time to transact.
  • As the traditional Autumn season officially now commences, there is a considerable volume of office transactions in legals. These will, in due course, provide a boost to take-up volumes although with only four months left in 2019 and Brexit uncertainty expected to heighten over the coming months, it remains to be seen how many of these sizeable transactions will complete before year-end with some now potentially falling into Q1 2020.
  • In addition to many outstanding mandates, a number of new office requirements have materialised in recent months, which is encouraging. With a good volume of fitted suites, serviced accommodation and co-working options available to occupiers to satisfy requirements in the short-term, there is less pressure on occupiers to make decisions on longer-term accommodation needs at present. That said, speculative office buildings that are under construction are generating considerable interest from potential occupiers once practical completion is in sight.

Industrial & Logistics

  • More than 170,000m2 of take-up was recorded in the Dublin industrial & logistics market during the first half of 2019 – up almost 60% on the same period last year – boosted to some degree by an increase in Brexit-related activity. Momentum continued throughout the Summer months and there are now several transactions in legals in this sector, which are due to complete over the course of the coming months.
  • Demand for light industrial buildings has increased noticeably in recent months and several sizeable new requirements have materialised, which is encouraging.  In addition to ongoing sales and leasing of industrial & logistics buildings, we have witnessed an increase in activity in the industrial land market in the last couple of months with several acquisitions underway off-market, including a number in the data centre sector. 
  • Interestingly, CBRE say that the industrial and logistics sector of the market looks likely to see increased demand regardless of the ultimate outcome on Brexit.
  • The average vacancy rate in 34 of the most modern industrial and logistics parks in Dublin was 8.37% at the end of Q2 2019 but this is expected to decline over the coming months on the back of current activity levels and the dearth of new supply under construction in this sector.


  • The uncertain outlook on Brexit is skewing Irish consumer sentiment and causing some retailers to put off decision-making at present.
  • Much of the activity in the retail market at present is heavily concentrated in the convenience, food & beverage, service and leisure sectors as is evident from recent transactions.


  • 43% of investment in real estate in Ireland during the first half of 2019 comprised residential properties with Dublin included in the Top 10 European destinations for cross border multifamily investment in the period. In total, more than €898 million was spent on residential investment transactions in Ireland during the first half of the year – a figure that is likely to be exceeded in H2 as several large trades are completed both on and off market over the coming months.
  • Activity in the Irish Build-to-Rent sector continued unabated throughout July and August as various investors, promotors and operating platforms continued to look for opportunities to align themselves with developers and deploy capital into what is essentially a supply-starved market.
  • According to CBRE, recent transactions bring the number of residential units under institutional ownership in Ireland to approximately 11,700 – an increase of 2,340 units (25%) since the end of 2018, with 15 individual institutional owners now active in the Irish market.
  • The Residential Tenancies Board (RTB) has recently provided better clarity on what constitutes ‘substantial refurbishment’, in order to obtain exemptions from rental caps, which has been helpful in clearing up ambiguity for both landlords and tenants alike.
  • As viability improves further in regional locations, CBRE expect to see some purpose-built Build-to-Rent stock starting to come on stream and being proposed in cities outside of the Dublin market in due course.

Development Land

  • There has been increasing evidence of price stabilisation in the development land sector over recent months as developers react to easing house price inflation, affordability issues and rising build cost inflation. There is particularly strong demand for sites guiding up to €5 million and a busy H2 is clearly in prospect as new sites are formally launched for sale. However, with most of the land coming to the market and transacting at present comprising relatively small infill sites, the overall spend on development land is likely to be down year-on-year, albeit consistent with spend in the 2014-2017 period.
  • The industry are naturally concerned about mooted changes to the ‘Help to Buy’ scheme in the forthcoming Budget on the basis that any tampering with this system, which has been instrumental in helping to increase new home delivery in the last two years, could stymie the delivery of much-needed supply in the Greater Dublin Area where supply shortages are most acute.


  • In keeping with the time of year, transactional activity was relatively subdued in the Cork market during the months of July and August although negotiations are ongoing on several transactions, including office leasing transactions and land sales, which will hopefully come to fruition over the coming months.
  • Most of the activity in the Cork market in recent months has been focussed on planning and development with construction continuing at pace on several projects in the city and planning lodged, or in the process of being lodged, on a number of new schemes.


  • From a transactional viewpoint, demand continues to outstrip supply in the hotel sector, particularly for hotels in prime Dublin city centre although there has been somewhat of a plateauing in hotel performance of late, which is probably attributable to the impact of last year’s large hike in VAT and the fact that new hotel supply has finally started to come on stream. In addition, several of the student accommodation residences that have been developed in the last few years have been let to tourists during the Summer months, which in turn is alleviating pressure in the hotel sector. Changes which came into effect in July regarding the short-term letting of residences on sites such as Airbnb, don’t appear to have had any discernible impact on the hotel sector as yet.
  • There was almost €206 million of hotel transactions recorded in 12 sales in the first half of the year although this is not representative of underlying activity on the property side with several large hotel transactions currently at various stages of negotiations and legals including some sizeable Dublin properties which have the potential to significantly boost H2 transaction volumes.  In fact, there is up to €500 million of hotel transactions which have the potential to complete before year-end.


  • There has been a discernible increase in investor demand for nursing home and primary care centres in the Irish market in recent months, mirroring a trend being experienced throughout Europe as investors, encouraged by demographic changes, seek to source investment opportunities in alternative sectors such as healthcare. 
  • Many investors in this sector seek to undertake sale & leasebacks or purchase operational nursing homes with a view to creating long-term leases to specialist operators (with rents linked to earnings or the Consumer Price Index, which in turn are particularly appealing to investors). In some cases, they are looking to develop new facilities with new builds offering an opportunity to create operational efficiencies and ensuring compliance with tightening regulations. However, with each nursing home bed costing between €160,000 and €165,000 to develop, the viability of many proposed schemes remains challenged.

·       Almost all the transactions that are occurring in this sector of the market are occurring off-market, making it a difficult market for investors to navigate. However, investors are sourcing opportunities and in the relatively recent past, the ownership of several of the largest nursing home groups in Ireland has transformed with French, German and Dutch investors now owning many of the larger facilities. Most of these funds have an appetite to grow their Irish portfolios further with most aspiring to owning up to 1,000 bedspaces in due course. In this regard, it is welcome to see a new Irish fund recently being set up by Blackbee to raise €250 million to purchase and develop nursing homes throughout the country.

Dublin Pubs

·       There has been considerable activity in the Dublin pub market during the Summer months, which will provide a welcome boost to activity in this sector over the coming months as these transactions complete. Several Dublin pubs including Quinn’s and The Cat & Cage in Drumcondra, Dublin 9; The Leeson Lounge in Dublin 2; The Concorde in Raheny; The Copper Bar in Sandyford; Uncle Tom’s Cabin in Dundrum and The Magpie Inn in Dalkey are all now in legals.