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Published in Commercial Property on 01/07/2020

Signs of Recovery Across Some Sectors of Property Market


CNI Editor reports

Commercial property specialists CBRE Ireland today released their latest bimonthly report for July 2020 commenting on trends and transactions in all sectors of Ireland’s property market and the impact the unprecedented Covid-19 lockdown has had and will have for different sectors of the market. According to CBRE, Ireland’s commercial property market has experienced a ‘lost quarter’ as a direct result of Covid-19, with transactional activity in the occupational, development and investment sectors of the market having effectively ground to a halt since campaigns were put on hold in March.

Following several months of enforced lockdown, which CBRE say accelerated structural property trends that were happening anyway, the property consultants say that a recovery is now in sight for some property sectors as we reach the mid-year point, with a resumption in activity slowly starting to materialise over recent weeks. CBRE say that investor appetite for Irish real estate remains strong and considerable fundraising has taken place over recent months. This capital now needs to be deployed, which the property consultants say should see a resumption of trading activity in the investment sector of the market over the coming months once travel restrictions are lifted. They expect to see particularly strong demand for multifamily investment opportunities considering the extent to which this sector has demonstrated its defensive characteristics over recent months. However, it will be later in the year before there is a meaningful rebound in demand in the occupier or development sectors of the market. Meanwhile, the retail and hospitality sectors look set to remain in the ‘eye of the storm’ for some time yet.

CBRE say that the market has reacted positively to Government formation although it remains to be seen what specific impact the policies of the new administration will have for the property market. It is clear that the State will take a significantly more active role in the delivery of social housing from this juncture, which CBRE say will necessitate collaboration between the public and private sector. CBRE say that details of the Government’s July Economic Stimulus plan are now eagerly awaited as supports are clearly required to enable businesses and SME’s to get back to some semblance of normal trading over the coming months. The property consultants also stress the need to see continued collaboration between landlords, tenants & financiers to help those who are genuinely struggling financially.

According to Marie Hunt, Head of Research at CBRE Ireland, “The extent to which real estate pricing has been impacted by market uncertainty and rising funding costs remains to be seen, albeit every sector and subsector of the property market will be impacted differently. The extreme volatility of the last cycle and the extent to which Irish property values declined during the Global Financial Crisis is understandably still fresh in investors’ minds but this downturn is different in many respects. While the pace of descent has been considerably quicker, this downturn is not a liquidity crisis, leverage is considerably lower than it was in 2008/2009 and oversupply is simply not a concern in most sectors of the market. The ownership profile of Irish real estate is also utterly transformed. Therefore, any deterioration in value that is experienced as a direct result of Covid-19 is likely to be moderate by comparison to the severe value declines experienced in Ireland during the last property market downturn”.


  • A number of office requirements and transactions that were on hold over the last couple of months are now reigniting; enquiries have increased, and socially distanced inspections of available buildings have started to take place again. However, Q2 take-up will only be a fraction of that recorded in Q1 2020 and it is likely to be Q3 before there is a meaningful improvement in leasing volumes.
  • Only approximately 140,000m2 of new office stock will be completed in Dublin this year and encouragingly, of the more than 265,000m2 of office accommodation due for completion next year, almost 70% is already pre-committed, meaning oversupply is clearly not a concern in this particular cycle.
  • For now, it is too early to gauge how much ‘grey space’ will come back to the market if companies ultimately look to rationalise their footprint.  Despite this, CBRE are not forecasting a major deterioration in prime headline office rents in the Dublin market in this particular cycle.


  • Demand for modern logistics facilities remains robust in this sector with many companies requiring additional warehouse accommodation to hold inventory as a direct result of Brexit-planning or to support increased online retail sales activity. 
  • The biggest challenge facing industrial & logistics occupiers in the short to medium term will be a shortage of modern accommodation – a situation that has been exacerbated by the complete cessation of non-essential construction during the lockdown period, which has pushed out completion dates of new buildings by at least 3 months. This acute supply demand imbalance will insulate headline rental values in this sector of the market with no discernible rental decline anticipated in this cycle.


  • The retail sector of Ireland’s property market has been one of the hardest hit by the Covid-19 pandemic over recent months and while all categories of stores are now adjusting to phased re-opening, the reality is that this is far from a return to normality for many retailers. Following the initial euphoria when stores first reopened, many retailers are now realising the extent to which consumer behaviour, footfall and ultimately turnover have been impacted.
  • It is inevitable that vacancy will rise in many schemes and high street locations while retail rents will ultimately decline as a direct result of increased availability and weaker demand. For some, this will generate opportunity, particularly for those retailers who have struggled to build a meaningful footprint in the Irish market due to a scarcity of supply.
  • For now, the experiential nature of shopping has been replaced with a functional experience and retailers have to adapt to the new reality in order to survive until such time as the market starts to recover. This will necessitate continued forbearance from landlords and financiers over the coming months. It is vital that landlords and tenants continue to work together to find solutions to avoid further casualties in the retail sector. This will inevitably result in considerable regearing of existing leases and we are likely to see an increasing number of retailers paying rents monthly as opposed to quarterly or moving to a turnover-related solution for the foreseeable future if that is an option.


  • It appears that most investment sales mandates that were planned prior to or during lockdown will be progressed but most likely postponed until a sense of market normality resumes. Furthermore, encouragingly, investor allocations to Ireland remain intact with evidence of strong appetite for opportunities from a range of international investors.
  • While we may see some off-market activity over the coming months, at this juncture, it is likely that the months of July and August will primarily be spent reigniting sales campaigns with marketing expected to recommence from September onwards once travel restrictions ease and investors can once again travel to inspect buildings. On this basis, it is likely to be Q4 2020 before there is any meaningful improvement in investment sales activity.
  • The unprecedented cessation of transactional activity has focussed minds and reminded investors of the significance of the level, duration and quality of income and there is no doubt that a ‘flight to quality’ will ensue over the coming months.


  • Transactional activity in the development land sector has effectively ground to a halt over recent months. Although there are some buyers targetting site acquisitions in the current climate, the reality is that unlike previous property market downturns, there is little sign of distress.
  • Pricing sites will remain challenging until such time as there is clarity on funding costs and the impact on construction costs as a direct result of Covid-19 delays and changes to work practices on sites.
  • For this year, the completion of even 15,000 housing units looks ambitious considering the slowdown in development that has occurred as a direct result of Covid-19 lockdown.


  • For a sector that didn’t exist in the last property market downturn, it has been particularly interesting to observe how defensively Ireland’s embryonic multifamily sector has performed over recent months. Both rent collection & occupancy have performed exceptionally well throughout the Covid-19 lockdown period, particularly in the mid-tier market – mirroring trends experienced in mature institutional markets such as Germany, the Netherlands and Sweden.
  • The sector has arguably been insulated somewhat by Government supports such as the wage subsidy scheme and the ban on evictions and rent increases. However, the severe imbalance between supply and demand in the private rented sector has also been instrumental.
  • Investor appetite for multifamily opportunities in the Dublin market remains strong with a large volume of European capital targetting investment in this sector and particularly strong demand for forward-funding opportunities. An increasing number of buyers are targetting schemes that are leased to Approved Housing Bodies and local authorities.
  • While some investors have reportedly been trying to acquire product off-market in recent weeks, it is encouraging that several multifamily opportunities are currently being prepared for sale from September onwards. Pricing for prime multifamily product has remained unchanged over recent months, with yields steady at 3.75%.  If there are price adjustments over the coming months, as a result of rising debt costs, more conservative rental growth assumptions or concerns about the sustainability of income once wage supports are removed, this yield shift is expected to be marginal – in line with trends witnessed in other European jurisdictions.


  • News that the Government’s phased reopening plan has been accelerated, allowing hotels to reopen several weeks earlier than had originally been anticipated has been broadly welcomed by the industry. However, the process of reopening poses difficult challenges for hoteliers, not least how to implement strict social distancing requirements. For the first time, the Irish hotel market will have to rely primarily on domestic ‘staycation’ activity to sustain business somewhat during the traditional Summer season this year. Bookings for July and August are reportedly encouraging, particularly for aparthotels and self-catering facilities in coastal locations. However, in the absence of any international tourism and no conference business, weddings, sporting or corporate events, the reality is that some hotels may opt not to reopen for the foreseeable future.
  • With hoteliers understandably focussed wholly on the survival of their core businesses at present, it is understandable that transactional activity in the property market will remain subdued for the next couple of months despite strong appetite for hotel properties from potential buyers. While there is some activity underway off-market and there has been a discernible increase in enquiries and some property viewings in the last couple of weeks, it is likely to be later in 2020 before any hotel sales campaigns are reignited or new hotel sales mandates formally launched.
  • Hoteliers are hopeful of receiving some assistance in the Government’s forthcoming July Economic Stimulus plan with many pinning their hopes on a reduction in VAT or some other stimulus to enable hoteliers to continue trading until such time as ‘normal’ business resumes.


  • Over recent weeks, we have witnessed increased appetite from both operators and investors seeking to acquire healthcare facilities, led primarily by existing entities looking to expand their footprint in the Irish market.
  • CBRE have seen no evidence yet of any deterioration in nursing home values or diminution in expected multiples of earnings. They say that recent transactional evidence would suggest that values are holding, and interest is clearly very strong for good quality stock. However, the industry is as yet unclear on what new regulations HIQA may introduce in an effort to enhance infection control measures in the future. Contained ‘pods’ may for example become a necessity for all nursing homes, which could have major implications for overall bed management and staff rostering, while considerable capex may be required to facilitate necessary reconfiguring.


  • Activity in the Cork property market is slowly starting to reignite following several months of lockdown. Following an almost complete cessation of occupier and investment activity since March, a tentative increase in enquiries and building inspections has been observed in recent weeks, which will hopefully translate into transactional activity over the course of the Autumn.