Investment in commercial real estate rebounded in second quarter
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Loading... - Angelina Casa
- 02 Jul 2024
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The Irish commercial real estate market saw a significant rebound in investment activity during the second quarter of this year. According to provisional estimates from agents CBRE, a total of €472 million was invested across 24 transactions between April and June. This marks a substantial increase from the €162 million invested in the first quarter, reflecting a diverse spread of activity across several sectors.
Key Highlights
- Total Investment: €472 million
- Number of Transactions: 24
- Sectors Involved: Retail, office, healthcare, residential, and industrial markets
Major Deals
Largest Deal: Malahide Rental Apartment Development
The most notable transaction of the quarter was the off-market sale of a large rental apartment development in Malahide, north Dublin, for €70 million. This deal highlights the growing investor demand for established private rented apartment investments and student housing, as noted by Colin Richardson, research director at CBRE Ireland.
Retail Sector Dominance
For the second consecutive quarter, the retail sector attracted the most capital, accounting for 30% of the quarterly spend. Key transactions included:
- Mahon Point Retail Park, Cork: Purchased by French investors Corum AM for approximately €50 million from the Irish fund IPUT.
- Two Regional Retail Parks: Acquired by a private Irish investor for about €41 million from international investor Davidson Kempner.
Office Market Activity
The office sector also saw significant transactions:
- Elm Park Green Portfolio, South Dublin: Bought by the HSE for about €50 million from Starwood Capital. This 319,000 sq ft space will facilitate the development of the new National Maternity Hospital.
- 40 Molesworth Street: Sold by State Street Global Advisors to Deka Immobilien for just under €40 million. This former European Commission office includes a Specsavers outlet.
Market Insights and Future Prospects
Colin Richardson noted an uptick in investor demand, particularly in private rented apartment investments and student housing. He expects this trend to continue throughout the year, with several large-scale sales anticipated to close across various sectors.
Despite challenges such as higher capital costs and ongoing price discovery, the market has shown increased liquidity in Q2. This is attributed to the European Central Bank's interest rate cut in June and the expectation of further cuts in the second half of the year, along with a narrowing spread between vendor and purchaser price expectations.
Richardson highlighted that the commercial real estate market appears to have bottomed out in Q1, with investor interest and transactional activity expected to continue improving.
The second quarter of this year marked a robust rebound in the Irish commercial real estate market, driven by significant transactions across various sectors. With continued investor interest and expected liquidity improvements, the market outlook for the remainder of the year appears positive.
FAQs
What was the total investment in Irish commercial real estate in Q2?
The total investment in Irish commercial real estate during Q2 was €472 million.
How many transactions were recorded in Q2?
There were 24 transactions recorded in Q2.
Which sector attracted the most investment in Q2?
The retail sector attracted the most investment, accounting for 30% of the quarterly spend.
What was the largest deal of the quarter?
The largest deal of the quarter was the off-market sale of a large rental apartment development in Malahide, north Dublin, for €70 million.
What are the future prospects for the Irish commercial real estate market?
The market is expected to see continued investor interest and transactional activity, with more large-scale sales anticipated across various sectors. Increased liquidity is also expected due to recent and potential future interest rate cuts by the ECB.
