Property investment activity reaches 18-month high

The sale of the Square Shopping Centre in Tallaght was the largest single deal recorded over the last three months, worth €130m. 

Investment activity in the Irish property market strengthened between July and September, reaching its highest level in 18 months on the back of falling interest rates, a new report by estate agents Sherry Fitzgerald shows.

Total investment activity totalled €591m in the last three months — a 26% increase on the same period last year. The number of larger-sized transactions also increased, with 13% of all deals valued at €50m or more, while 31% of transactions were valued between €20m and €50m.

The report said the increase in investment activity “reflects an improved interest rate environment and more favourable asset pricing”.

The largest deal recorded was the €130m acquisition of The Square Shopping Centre in Tallaght by Eagle Street Partners from Oaktree Capital Management. Another significant retail transaction was the off-market acquisition of Blackpool Shopping Centre in Cork by Lugus Capital and Patron Capital from Verde Partners for an estimated €49.5m.

Retail continued to be the dominated sector, accounting for one-third of the total spend during the last three months. Office and industrial assets saw a resurgence in investor activity, with each sector accounting for 23% of total spend.

In contrast, residential spend remained subdued representing only 8% of total turnover.

According to the report, one of the reasons the residential sector had not recovered like other sectors was because international investors remain “discouraged by current Government policy and uncertainty over further potential interventions”.

“Investors are likely to remain cautious in the short term until after the upcoming elections, when policy should be clearer. This is despite the urgent need for investment in a market that remains severely undersupplied,” the report said.

Dublin attracted 79% of the total investment during this three-month period, with Meath absorbing a further 12%. Cork accounted for 8% of the total turnover largely as a result of the sale of Blackpool Shopping Centre, while the remaining 1% was spread across a number of locations.

The report said the outlook for the rest of the year “looks promising” with a number of large assets currently sale agreed that are expected to close in the coming months. The retail sector is expected to continue to have the largest proportion of that investor spend.

The estimated €600m sale of Blanchardstown Shopping Centre to Strategic Value Partners is expected to close by the end of the year.

Total turnover for the first nine months of the year stood at almost €1.3bn — which is 13% lower than during the same period in 2023. However, the report notes this is “due to the record low level of investment recorded during the opening months of the year”.

“In particular, total turnover in the last six months was a significant 37% greater than the corresponding period of 2023, highlighting stronger sentiment in recent months buoyed by the improved conditions in the international interest rate environment and more favourable asset pricing,” the report said.