Sunday 25 February 2018

Commercial property deal levels slump as market eases

Dundrum Town Centre, the landmark shopping centre which has just been sold by Nama
Dundrum Town Centre, the landmark shopping centre which has just been sold by Nama
Peter Flanagan

Peter Flanagan

The value of commercial property sold in the third quarter of this year plunged to barely half the level in Q1, in a possible sign of a slowing market.

Data shows that just over €2.2bn worth of commercial property has been bought and sold in the year to date.

However quarter by quarter data obtained by the Irish Independent shows that almost half of that was cleared in the first three months of this year and has tumbled in the quarters since then.

The figures show that 45 deals worth just over €1.03bn were completed between January and the end of March this year. The quarterly total falls sharply after that however.

In Q2, there were 54 transactions, but the aggregate value of those properties was only €665m - a drop of more than a third. That trend continued into the just completed third quarter of 2015. The number of deals completed was 45 - the same as Q1. But the total value of those deals was a relatively paltry €530m - barely half the value of the first 45 sales of 2015.

In 2014, nearly €5bn worth of commercial property changed hands. While the third quarter is traditionally the quietest time of the year for property sales, there has been little evidence of a slowdown in recent years.

The average deal size has also plummeted some 56pc compared to the third quarter a year ago.

The quarterly figures do not include loan sales, and instead focus on straight property transactions.

More than half of the sales between July and September were office blocks or offices mixed with retail.

Retail and retail warehousing accounted for just under a third of sales, while the industrial market and hotels accounted for only 5pc between them.

Inevitably, the main focus was on Dublin but there are signs now that activity is spreading further out around the country.

Michele Jackson of property broker TWM Property Solutions, said the statistics reflected the changing face of the Irish commercial property market.

"In recent years the big loan sales have been quickly followed by property sales as investors churn their portfolio but as the major loan sales have slowed, its perhaps inevitable that there would be a slowdown and a smaller average lot size," she said.

"You have to remember that the Dublin market was traditionally dominated by families who owned some major properties but rarely sold.

"Today though the market is dominated by investment firms which tend to buy and sell much more regularly.

"For example, Blackstone is selling two office blocks in central Dublin barely 18 months after buying them. Something like that would not have happened in previous cycles," Ms Jackson added.

Stephen Aherne of broker CBRE claimed that Q3 had been "another active quarter in the Irish investment market".

"Interestingly, 41pc of the total spend in the first nine months of the year comprised assets with a value of more than €100m but there were also 77 individual transactions of between €1m and €10m signing in the year to date," he said.

Irish Independent

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