Thursday 27 October 2016

Market activity increases sharply outside Dublin

Donal Buckley

Published 26/05/2016 | 02:30

Dungarvan Shopping Centre formed part of the Harvest Portfolio
Dungarvan Shopping Centre formed part of the Harvest Portfolio

The spread of the property market recovery into the counties outside of Dublin increased significantly last year according to a new report.

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The research from Sherry Fitzgerald tracks the flow of capital through the property market around the country. It shows that the value of all types of property transactions in the regions outside Dublin increased by 28pc to €6.9bn during 2015. While Dublin still accounted for the lion's share with €9.53bn worth of property deals, in fact this was a drop of 6pc on the 2014 performance of the Metropolis. All the other counties saw an increase in the capital value spend.

Increased appetite for regional commercial properties as well stronger increases in regional house prices were key factors driving the increase in regional market share.

Another key factor was the strong performances in key regional centres, most notably Cork, Kildare and Galway.

The value of all transactions in Cork city and county rose by 40pc to almost €1.4bn in 2015 and this combined with a 55pc surge in Kerry where there were €298m worth of deals, enabled the south west to fare best of the regions with €1.69bn worth of deals.

It was followed by the Mid-East where the value of deals increased 29pc to €1.56bn. This was largely due to Kildare where a 48pc increase in deals to €699m made it the third strongest county market after Dublin and Cork. Galway was the fourth strongest county with a 23pc rise to €578m.

The commercial sector, with €5.1bn invested, accounted for almost a third of the national property market.

An analysis of the profile of commercial transactions by location reveals that €1.57bn or 69pc worth of commercial deals were devoted to Dublin properties. Nevertheless 2015 saw a major shift in investment with the value of all Dublin commercial investment deals falling 16pc to less than €3.56bn while commercial deals outside of the capital increased by 32pc to €1.19bn. Consequently the regional share of the commercial market rose to almost a quarter or 23.3pc of the national market.

The cities of Cork, Limerick and Galway as well as County Kildare were key drivers of commercial investment outside of the capital. Collectively counties Cork, Galway and Limerick accounted for over half a billion or 10pc of total commercial spend.

However not all counties saw increased flows of commercial deals in 2015. Some including Dublin performed better in 2014 and consequently 11 counties saw declines in the value of their commercial deals last year. These include Cork, which, while still the second strongest market outside Dublin, saw the value of its transactions fall 2pc to €302.4m.

Marian Finnegan, chief economist with Sherry FitzGerald Group attributes the increase in regional spend to a number of large portfolio sales containing regional assets spread across the country in particular, the Western Portfolio, The National Portfolio, Cornerstone Portfolio, Hazel Portfolio and Harvest Portfolio containing a number of prime shopping centres and retail parks.

"It is also important to bear in mind that activity outside of Dublin was subdued during 2014 and as such, the increases in 2015 are off a low base. There were a few portfolio sales in 2014 with regional assets, namely The Parks, Acorn and Spectrum, which explains some of the reductions such as those in Tipperary, Louth and Carlow in 2015," she adds.

In contrast Kildare recorded a phenomenal 126pc growth to €135m making it the third strongest county also for commercial deals. Kildare's performance "stems largely from an improvement in the development land market. Notable deals boosting activity include the sale of Millennium Park, Naas, for in excess of €35m and Tougher Business Park Portfolio, Newbridge Road, Naas, for €18m. The county's biggest commercial investment deal was the sale of Newhall Retail Park for about €23m," says her colleague, senior economist Siobhan Corcoran.

Galway, with an 11pc increase in the value of its transactions to €105.99m, was fourth strongest in the commercial transactions narrowly pipping Limerick with €105.98m.

Kerry, with a 151pc jump in deals to €103.66m, was one of only six counties to top the €100m level of transactions around the country.

"Activity was boosted by some large investment transactions, including the sale of Manor West Shopping Centre, Tralee, for €58.55m and Deerpark shopping centre in Killarney which formed part of the National Portfolio," adds Siobhan Corcoran.

With trends so far suggesting a fall in the level of national deals this year, it would be difficult for the Kingdom to sustain this level of deals.

Westmeath almost made it into the €100m bracket after a 164pc jump to €97m in the value of the county's commercial transactions. "Spend here is off a low base and boosted by portfolio shopping centre sales, namely, the sale of the Athlone Town Centre as part of the Cornerstone Portfolio and Harbour Place Shopping centre in the Harvest Portfolio," says Corcoran.

Waterford showed the strongest growth in the year with a 263pc rise in the value of its commercial deals to close to €59.4m.

"This increase relates mainly to the sale of City Square Shopping Centre, Waterford for €21m and the sale of Dungarvan shopping centre as part of the Harvest Portfolio.

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