- €760m of investment property changed-hands in Q1 2022 (30 transactions)
- Just €1.8m invested in the traditional prime Dublin 2 market (1 deal) - the lowest activity ever recorded in this prime postcode
- Reflects a sustained shift in investors’ preferences away from shops and older office blocks, in favour of apartments and logistics facilities
- Offices accounted for just 6% of Q1 investment turnover – an all-time low. This reflects the scarcity of modern, environmentally sustainable office buildings that are available to buy
- Retail property accounted for only 3% of purchases as competition from e-commerce continues to drag on investor sentiment
- Overall demand for Irish property remains very strong, but the focus has shifted to residential property (50% of the quarter’s turnover) and warehouses (23%)
- Activity set to ramp-up further during the year with €4-5bn of trading expected in 2022.
A new report from BNP Paribas Real Estate Ireland (BNPPRE) reveals that only one investment property in the prime Dublin 2 market changed hands in the first three months of this year, a small mixed-use asset which sold for just €1.8m. This continues a trend of declining sales in Dublin 2 since early 2020.
According to John McCartney, Director of Research at BNPPRE, this reflects a shift in investor preferences away from shops and older office blocks which comprise most of the building stock in Dublin 2.
“Competition from e-commerce has dampened investors’ appetite for traditional high street shops in recent years, and this continued in Q1. There is still significant appetite for offices given sustained growth in Ireland’s service economy. But institutional investors really want buildings which meet the highest environmental standards as these are now easier to let and generate more rent.”
Although a considerable amount of high-spec office space is under construction, BNPPRE says there are still relatively few buildings in Dublin that meet the highest environmental standards and, where they exist, the owners often do not want to sell.
“Value-add investors will consider buying and repositioning older office blocks, but this involves more risk and is complicated by construction inflation which reached a near record high in March according to the BNPPRE Construction PMI.”
Whereas shops and offices accounted for 99% of investment trading in 2011, their combined share has steadily reduced to just 9.2% in Q1 2022. In contrast, the share of residential and logistics property has increased to 73% of turnover in the first three months of 2022. BNPPPRE says investors are attracted to these assets by their defensive properties – regardless of economic cycles people will always need places to live and goods which have to be warehoused.
Kenneth Rouse, Managing Director and Head of Capital Markets at BNPPRE noted that Ireland is particularly appealing to international buyers of these assets because of its strong economy and rapid population growth;
“Strong relative value and good liquidity, combined with a stable economy and favourable demographics are attracting, and will continue to attract, significant capital to Ireland.”
Press Release Contact:
Ellen Browne, Business Coordinator
ellen.browne@bnpparibas.com
