Dublin suburban offices drive Q2 investment
The continuing fall-off in the number of large commercial property assets being offered for sale in the Irish market saw turnover of €278m recorded for the three-month period to the end of June, according to the latest quarterly report from BNP Paribas Real Estate.
While that level of transactional activity was low compared to previous quarters, the head of research at BNP Paribas, Joan Henry, said it reflected a "maturing" of the Irish investment market cycle.
The dearth of major assets now being brought to the market is not surprising given the succession of large portfolio disposals which took place between 2014 and 2016.
BNP Paribas notes that almost €14bn of assets traded since the beginning of 2014, resulting in a change of ownership for the vast majority of Dublin's prime office and retail assets.
The lack of larger lot sizes now available to the market, coupled with the arrival of a wider pool of international investors with a preference for assets in the €50m to €100m value range, has - according to BNP Paribas - seen prime yields plateau.
Further potential tightening of yields remains dependent on larger transactions completing in the coming quarters.
Some 46pc of turnover in the second quarter was accounted for by the top five deals, four of which were for office assets.
The top five sales were: The Park office portfolio in Carrickmines, Dublin 18 (€38.8m); One Grand Parade, Dublin 6 (€23m),;Building 2, South County Business Park, Leopardstown, Dublin 18 (€20.5m); Ericsson Facility, Athlone (€20m); and 42-43 Henry Street, Dublin 1 (€18m).
BNP Paribas noted that this had been the first quarter in this cycle that three of the highest-priced office assets were outside the core location of Dublin's central business district (CBD).
Commenting on the prospects for the Irish investment market, Ms Henry said it "remains in good health".
She said this is owing to "the strength of the economy and the profile of employment growth, along with its resilience to date to Brexit and the changing geo- political backdrop".