Sunday 17 December 2017

Recovery on as agent forecasts €1.7bn sales

AIB's former IFSC offices were bought by US firm SIG for nealrly €30m earlier this year
AIB's former IFSC offices were bought by US firm SIG for nealrly €30m earlier this year
Peter Flanagan

Peter Flanagan

THE recovery in the Irish Investment market is now "firmly under way" as increased demand and favourable government policies boost the commercial property market.

DTZ Sherry FitzGerald is the latest major player to call a recovery in the market as it publishes its review of the Irish Investment Market for autumn.

The firm is forecasting commercial property sales to top €1.7bn by the end of this year – even higher than had been forecast just three months ago in the broader sector.

"There is strong demand from cash buyers seeking good €100m+ income producing portfolios with asset management potential," say DTZ.

"Supply levels have increased in quarter three with the launch of the highly anticipated portfolio sales Project Arc and the Ulysses Portfolio, with a combined sales price of just under €290m," the agents add.

The firm also claims there has been an increase in off market investment activity as buyers continue to make strong approaches to secure prime properties.

APPETITE

Apart from the peak boom years between 2005 and 2007 when transactions routinely topped €1.5bn a year, this year will see the highest level of deals since at least 1989, according to DTZ. More than half the value of the sales came on five transactions, as major deals began to return to the market.

"Investor appetite for transactions in excess of €50m remains strong, the research shows.

"There is increasing appetite from both Irish and overseas investors for large lot sizes (€100m+) and there has been few options to fill this requirement.

A further 19pc of transactions were recorded in the €20-€50m category. The largest deal in this category in the year to date was the sale of retail units 103/104 on Grafton Street in quarter one to the German fund manager GLL Real Estate for €40m.

The two speed recovery remains very clear – split between Dublin and the rest of the country. A whopping 93pc of investment into this country has gone to Dublin, but DTZ "expects to see the continued improvement in the market to spill over into other sectors and indeed beyond Dublin".

The office sector is clearly the driving force for the improvement in the commercial sector, accounting for the majority of deals in the first nine months of the year.

"Within the office market, the 'flight to quality' has seen investors and lenders still focusing attention on prime assets in core locations. The recently launched sales of the multi-let office building at 6 Georges Dock in the IFSC and office redevelopment at 43-49 Mespil Road are attracting significant interest from both domestic and non domestic investors, both of which are due to close before Christmas. The deadline for bids for 6 Georges Dock passed a fortnight ago.

The extension of the capital gains tax exemption to the end of 2014 had been expected to take some pressure out of the market in the final quarter of the year, but that idea was dismissed by DTZ Sherry FitzGerald.

Irish Independent

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