Commercial property sales 'will top €3bn'
THIS year is likely to be the biggest year for commercial property sales in the history of the state, as the market continues to surge.
Speaking at a property investment and loan sales seminar in Dublin, Lisney director of investment Duncan Lyster said capital values grew by 20pc in some cases in the first quarter of 2014, and forecast commercial sales in 2014 should easily top €3bn.
"Prices have increased dramatically and it is going to be harder to get the level of returns that were achieved," he said.
"The market is maturing and we are seeing a move from some more opportunistic or transient buyers who require very high returns to more long term owners who have a lower cost of capital. Rental growth projections are strong and this is driving demand."
Mr Lyster added that while yield compression would probably slow over the rest of the year, Dublin in particular was becoming relatively expensive compared to similar European cities.
"Ireland was one of the top four dominant markets in international loan sales in 2013 and continues to be of significant interest to international investors, but there is now a greater proportion of Irish buyers investing in commercial property," he added.
A similar view was taken by Cushman & Wakefield's Michael Lindsay. Mr Lindsay, who specialises in the sale of loan books, said Ireland had been one of four dominant markets in European property loan sales in the last two years.
Some 89pc of European loan sales took place in Ireland, UK, Spain and Germany last year and Ireland alone accounted for 14pc of the European total in 2013.
"That proportion has only increased and for the year to date in 2014, represents 27pc of the €33.5bn worth of deals closed up to mid-May," he added.
High levels of activity are set to continue in 2014 according to Mr Lindsay of international commercial estate agents Cushman & Wakefield who forecasts over €50bn in loan sales to close this year.
Perhaps unsurprisingly American investment firms remain the main buyer of European loan books, accounting for 70pc of the total disposed last year.
Mr Lindsay heaped praise on NAMA and chairman Frank Daly for the way the agency has gone about disposing of its assets.
The valuation process has been relatively straightforward so far, and this made it easier to dispose of the majority of the assets.
That was due in part to the ease of doing business in Ireland, he said.