WE HAVE just launched our Review 2013 / Outlook 2014 document on the property market and, thankfully, over the last 12 months, there were some very noticeable improvements in certain parts - most notably in residential, commercial investment and offices.
On the residential side, the number of properties for sale fell even further, to levels not sufficient to service the strong demand present in city areas and as a result, prices increased. There is now a very strong need to construct a greater number of new homes in Dublin and Cork to fulfil existing and future demand.
In the commercial sector, it was an exceptionally strong year for investment sales, where total turnover reached almost 1.9bn. This strength in the market is exceptional when considering that 1.9bn worth of property was also transacted in 2007 and that was at a time when values were as much as three times higher. Sales in this sector were dominated by large portfolios such as Opera (Treasury Holdings assets) and Ulysses (mainly Liam Carroll properties). Outside of the portfolios, office properties were most in demand, particularly those in Dublin city centre and this was followed by multi-family opportunities (apartment blocks in single ownership).
This year, a greater number of retail assets will be sold, including shopping centres and further off-market deals at aggressive prices are likely. It is possible that the investment market could peak towards the end of 2014 as the deadline to avail of the CGT exemption ends.
The office occupier market also performed very well in 2013 with FDI companies continuing to dominate in Dublin and Cork, particularly those in the IT and financial sectors. In Dublin, the amount of accommodation taken up in the year exceeded the long-term average figure and vacancy fell across all regions. In Dublin, prime rents rose 16% in 2013 and are now just at the levels required to justify new construction. Accordingly, we will start to see some developers with well-placed sites in the city centre begin construction in 2014.
Indeed, the redevelopment of Canada House on St Stephen’s Green has already commenced with demolition works ongoing. This will be welcome as it eases concerns about Dublin having insufficient quality office stock to meet market and FDI demands.
Given the long lead-in time associated with new construction, there are significant opportunities to refurbish older buildings in prime office areas and capitalise on the rising rents and limited supply.
The development land market showed the first real signs of renewed activity in 2013 after a long period of minimal transactions and continually declining values.
Demand was not spread evenly across all sub-sectors and the key segments were high profile mixed-use sites, such as the former Veterinary College site in Ballsbridge and infill residential sites in established housing locations in Dublin and Cork. Also in demand were central sites in mid to large towns nationwide for supermarkets, primarily discounters.
This year will build on the positive momentum of last year and we anticipate greater demand and increasing prices for development land.
We are optimistic about 2014 and anticipate further improvements in the occupational markets and another busy year for investments.