Property investors look to Dublin again

A sharp drop in commercial property values has put Dublin back in the top 10 European city radar for investors.

However, the clear leader in attracting international property investment is London, in part thanks to its Sterling base, followed by Warsaw and Paris.

After years when Dublin’s high property values and low returns discouraged real estate investors, the 60% or larger drop in values has seen price-conscious hunters re-looking at the Irish capital.

Dublin came in sixth, after Munich and Berlin, and ahead of Hamburg, Stockholm, Madrid and Frankfurt.

The sentiment survey of more than 340 property investors by international agents CBRE, was revealed at Tuesday’s MIPIM commercial property fair in Cannes, with Dublin described as “a radically re-priced market perceived to have recovery potential”.

In country terms, 31% of investors favoured the UK, with Germany second at 27%, followed by Central and Eastern European countries.

Ireland did not make the top ten of countries rated.

In city terms, London came in with a huge 37% appeal, rated for its liquidity, prestige, size, stability and transparency.

“The increase in the UK’s attraction to real estate investors in 2012 can be seen partly as a reaction to the ongoing problems and uncertainty in the euro area.

“In this context, the high liquidity and ‘safe haven’ attributes of the UK market appear to have become more attractive,” Marie Hunt of CBRE in Dublin noted.

She said there had been “a notable increase in the volume of investors seeking investment opportunities in the Irish market,” but the lack of prime property assets to satisfy this demand was frustrating.

Whilst offices and retail remained the most popular sectors for real estate investment in Europe, sentiment was cooling due to their exposure to weak economic prospects evident in a range of European markets.

“Dublin’s appearance, ahead of many larger European markets, suggests a significant strand of investor interest in a radically re-priced market perceived to have recovery potential. Similar sentiment may explain Madrid’s appearance in the top ten, whilst Stockholm’s inclusion is more likely to be based on perceptions of relative economic strength,” the CBRE stated.