Equity investors may lose appetite

Private equity investors are likely to lose interest in the Irish property market as its recovery continues to gather pace, according to leading commercial property consultants, CBRE.

However, in its latest Irish market research report, the company said that this trend shouldn’t dent investor confidence or demand.

“While many private equity investors are likely to become less focused on the Irish market as the cyclical recovery gathers pace, we continue to see new entrants emerging and, encouragingly, much of the new wave of appetite is emanating from more longer-term institutional investors, with lower return expectations,” it said.

CBRE expects to see continued sales activity in the commercial sector, over the remainder of the summer, with “several large portfolios” — including some retail investment opportunities — expected to be formally offered to the market.

The company said that “very strong” volumes of transactional activity were visible across all sectors during the first six months of this year.

It added that prime Dublin office rents have risen by 15% since the start of the year and that prime yields have stabilised in recent months. Continued activity hasn’t just been confined to the office market, with increased activity also evident in the hotel and licensed area (27 hotel sales, at a value of €132.3m being carried out in the first half, compared to 13 with a combined value of €48m in the corresponding period last year). Improvement is continuing in the retail sector.

“While rental growth is now beginning to materialise in the retail and industrial sectors, the rise in prime headline office rents in Dublin has been most acute and currently in the order of €403.50 per square metre; a level we had expected would be reached by year-end as opposed to the mid-year point,” CBRE said.


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