Business Commercial Property

Thursday 24 May 2018

'Normalising' Dublin drops down real estate investment ranking

Ellie Donnelly

Ellie Donnelly

Dublin has slipped in a ranking of European cities with the best prospect of rising real estate markets.

The annual forecast of over 800 real estate professionals in Europe by PwC and the Urban Land Institute found that the capital's infrastructure was seen to be failing to keep pace with growth.

The report cited seven years of "almost no domestic investment in new infrastructure".

However respondents, who included investors, developers, lenders, and consultants, see the private rental sector and student housing as a huge opportunity for investment in the next three to five years.

Dublin's ranking as a real estate prospect has fallen to seventh position from fourth in Europe last year, and from the number three slot two years ago.

"The report puts context on what is happening in our city. Investors are looking beyond traditional investing and at student accommodation and build-to-rent properties," said Joanne Kelly, PwC Ireland's real estate leader.

Dublin is also viewed as one of the cities likely to benefit from Brexit. In terms of the people and institutions investing in infrastructure here, there are fewer US private equity capital buyers and increasing amounts of institutional money, largely from Europe.

"The report highlights that Dublin is settling into a new phase as a normalised, mature and safe market to invest in after years as an opportunistic investing story.

"The make-up of buyers is changing accordingly - fewer US private equity capital and much more institutional money, largely from Europe, especially from Germany, France, Switzerland and the UK," Ms Kelly said.

But industry experts did note their concerns about the potential negative effects if the UK were to go into recession as a result of Brexit, particularly on the Irish tourism sector.

Looking beyond Ireland, for the fourth year in a row, Berlin has taken the top spot in Emerging Trends city rankings, further establishing its dominance in the European property market.

Frankfurt, which is seen by many as the main competition to Dublin in attracting companies looking for a European alternative to London, has risen to second place after a year of solid growth, much of which has come from the financial sector following the Brexit vote.

Tied for second spot with Frankfurt is Copenhagen, which has a booming residential market that it capturing the attention of the international real estate industry. Munich and Madrid complete the top five cities for property investment and development in a good performance overall by German cities.

However London was ranked only 27th in the report, behind a number of other UK cities including Manchester, Birmingham, and Edinburgh, with the industry experts taking a "dim view" of the city's prospects on account of Brexit.

"London's lower ranking is largely because of the uncertainty around Brexit, however there is a lot of Asian capital still flowing in and London is still seen as the financial capital of Europe," Ms Kelly told the Irish Independent.

Overall the property industry is cautiously optimistic about its European business prospects in 2018.

Around half of respondents predict that profits and head-counts will increase next year, while 42pc expect an increase in business confidence - up 10pc on last year.

Irish Independent

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