US investors still largest buyers of Dublin offices
Henderson Park's purchase of Green REIT's Dublin office portfolio, which includes One Molesworth, will boost the British presence in Dublin's office market at a time when UK investors were becoming overshadowed by investors from the US, Europe and Asia.
According to the latest research report from Knight Frank Ireland, UK investors generated more from the sales of Dublin offices since 2013 than they invested in purchasing those offices. They generated €362m from sales, equating to €35.8m more than the €327m they spent on purchases. Henderson Park's latest purchase will see its Dublin office portfolio worth at least €1.2bn.
In an analysis of the €8.5bn worth of office investment transactions that have occurred in Dublin since 2013 - the year the investment recovery began in earnest - Knight Frank estimates that Irish direct investors in Dublin's office market accounted for 26pc of office purchases compared to 56pc for foreign investors, with REITs, which are mainly used by indirect foreign investors, accounting for the remaining 17pc.
US investors accounted for the largest direct foreign investors with 23pc of purchases - followed by Europe 19pc, Asia 10pc and the UK 4pc.
Looking at sellers, Ireland accounted for the majority 65pc of sales as Nama deleveraged the country's exposure to the market. Irish investors sold €5bn worth of assets but purchased €2bn and Irish funds that were particularly active include IPUT and Irish Life.
John Ring, head of research Knight Frank, said US buyers were the largest source of private equity capital and were net buyers in 2013 and 2014 and net sellers since then, in-line with the employment of a three to five-year investment strategy. These American investors accounted for €1.84bn worth of purchases and €1.83bn or 24pc of sales.
Nevertheless, because they purchased early in the recovery and because capital values appreciated strongly since then, consequently US investors still retain a lot of equity in Dublin offices.
Mr Ring also points out that many US buyers purchased a disproportionate amount of large bundled mixed-use portfolios before later re-trading them as individual office asset sales.
"This means that they would be included as office sales but not as office purchases, thus overstating the net reduction in Dublin office holdings."
European buyers, mainly pension funds, entered the market in a significant way in 2015 and acquired €1.5bn since then.