Quarter of Dublin office sold in just 40 months
Published 07/06/2016 | 02:30
More than a quarter of all Dublin office space has changed hands in little more than three years, a rate described as "extraordinary."
International investors dominate the market, accounting for 68pc of sales in the first three months of this year, up from 62pc in 2015, according to a new report from Savills Ireland.
The report says that almost 1m square metres (sq m) of modern office space has traded in Dublin since the beginning of 2013 - equivalent to 27pc of the entire stock in Dublin.
In the core city centre districts the figures are even higher, with almost 40pc of office space in the prime central business district changing hands over the period.
The volume of sales reflects the fall out from the crash, including one-off exits by Nama and other banks from properties backed by soured boom-era loans, according to Dr John McCartney, economist and Director of Research at Savills Ireland.
"The extraordinary rate at which office buildings have changed hands reflects two things; firstly a glut of supply as Nama and the lending institutions put the assets associated with non-performing loans up for sale. Secondly, rapid growth in services employment which created strong occupier demand and low vacancy rates," he said.
Institutional investors and stock market-listed REITs have become the biggest buyers of office property since the start of 2015, accounting for 41pc of modern office purchases by volume and 80pc by value.
They are typically making large scale purchases, with the average deal size among such purchasers coming in at just under €50m.
The average size of deals done by private individuals was €3.6m.
Office space isn't the only commercial property changing hands, with hotels seeing strong demand.
And the country's biggest hotel chain has exchanged contracts to buy the freehold interest on Limerick's landmark Clarion Hotel for €8.5m.
In March Dalata acquired a leasehold interest in the 158-bedroom, four-star hotel, which dominates the Shannon waterfront in the city. The hotel is to be rebranded as a Clayton hotel before the end of 2016 with further investment planned, Dalata said.
Last week Dalata moved its stock maket listing to the main index on the Irish Stock Exchange and the London Stock Exchange.
The shares previously traded on the so-called junior market on the Irish Stock Exchange and the AIM in London, which is traditionally used by smaller companies.