The country’s commercial property market is set to emulate the exceptional levels of activity seen last year as investors scrambled to get deals done before the capital gains tax exemption expired.
Despite no such deadline looming this time around to focus purchasers’ minds, a busy second half of the year, with up to €800m of opportunities being brought to market, is anticipated by commercial property group CBRE, which yesterday released its latest bi-monthly research report.
Following a bumper start to the year, the occupier sectors of the Irish commercial market — office, retail and industrial — saw an expected drop-off in activity in July and August which will likely be reversed in the coming months.
A new “wave of commercial property transactions” is set to be unleashed in the closing four months of the year, according to CBRE.
“Last year, transactional activity was frantic in the second half of the year as purchasers pushed to have transactions completed by year-end to avail of the Capital Gains Tax exemption which expired on December 31,” the report reads.
“It would appear that the next few months of 2015 will be equally busy, despite the expiration of this tax benefit.”
While the occupier markets experienced a slump, the number of hotel sector deals struck in the past two months remained high following the 39 hotels that changed hands in the first half of the year for a combined €575m.
The past two months were the busiest July and August on record for the sector with more than a dozen deals completed.
Among those deals were the purchase of The Dawson Hotel and former La Stampa restaurant in Dublin city centre for €17m, Dublin 2’s Grafton Capital Hotel changing hands for a reported €12m, and the Westlodge Hotel in Bantry, West Cork.
Sales have also been agreed on The Derrynane Hotel and Waterville Lake Hotel in Kerry and The Cashel Hotel in Tipperary.
The Clarion Hotel on Lapps Quay in Cork city is in the pipeline of properties currently on the market that are likely to spell a busy remainder of the year.
Dublin city centre, meanwhile, remains hamstrung by a lack of office supply which continues to drive rents up. Prime city centre rents now stand at €565 per sq m, with those in the southern suburbs at just shy of €270 per sq m.
Although a number of office schemes are under construction in Dublin, the new accommodation these schemes will provide amounts to just over one year’s average take-up and approximately 45% of this space is already committed.
Construction is due to begin shortly on the iconic 36,750sq m Boland’s Mills site at Grand Canal Dock while the joint venture between Hibernia REIT and Starwood Capital on the Windmill Lane site will provide an additional 11,170sq m of office space.
Many of the new developments will not come on stream until 2017 meaning that rents will continue to edge ever higher in the interim.
As the traditional autumn selling season kicks off, the biggest challenge facing the retail sector of the market is a scarcity of properties in the locations and schemes that retailers are specifically targeting, with many prime high streets and shopping centres now boasting full occupancy, according to CBRE.
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