Ireland's investment property market reaches €3.2bn in first half of 2022

Hibernia Reit generates most of its rent from office multinational clients in Dublin city centre locations.

The value of the investment property market was €3.2bn for the first half of the year, marking the highest total for H1 on record.

A report published today from property dealer Savills Ireland revealed that the total value of transactions during H1 was 17% higher than 2021 and 11% greater than the previous market record in H1 2016.

The high level of market transactions during the first half of the year was driven by Hibernia REIT’s sale to Brookfield Asset Management for €1.1bn.

During the second quarter, the largest transaction was Hibernia REIT’s sale. Even when this sale was removed the market transacted €1.24bn, significantly above the 10-year average transaction volume of €950m.

Total property investment during the second quarter surpassed €2.3bn.

Savills said that increasing inflation and interest rates are resulting in negative headwinds which are leading to a softening of market sentiment in certain sub-sectors.

The company stated in the report that: "Transactions are increasingly becoming harder to underwrite, with volatility in the debt markets particularly elevated at the end of H1 which has led to increased borrowing costs."

The report also noted that despite the rapid changes in the financial environment, "the undersupply of residential units, ESG-compliant offices, and modern industrial assets will continue to propel investment transactions in the commercial real estate market over the longer term".

Brendan Delaney, divisional director of investments, Savills Ireland, said: “Investor sentiment has been impacted by the volatility and uncertainty of the global macroeconomic environment. However, Ireland’s commercial real estate market continues to see strong interest and transactional values. 

"The spread between real estate yields and the risk-free rate has narrowed over the first half of the year. However, Ireland’s attractive yield discrepancy between itself and other European property markets provides a relative cushion to the impact of higher borrowing costs and the stronger yields on offer from the bond market," he added.