Commercial investments near €3bn

By Tommy Barker

INVESTMENT in Ireland’s commercial property sectors may hit €3bn by year’s end, after a particularly strong run-up to the end of Q3, and with several key Cork investments playing a strong regional role.

Nationally, 46 transactions saw €505m invested between July and September, bringing the nine-month tally to €2.1 bn, say Cushman & Wakefield, who note that the office sector accounted for just over 50% of this, some €1.1bn, while Dublin accounted for 80% of transaction values.

Included in their analysis, however, was the rise of regional investment markets, headed, especially, by the €87.5m sale of the Elysian, via Lisney and Savills Cork.

Regional investment heights: the Elysian complex and tower, Cork, which sold for €87.5m during 2018. Picture: Larry Cummins

Also on the multi-family, residential-property front was the sale of Cork’s City Square, Blackpool, via Savills, for circa €33m, to a European fund, whilst Lisney and Savills also joinly secured the Q3, €35m sale of the Crescent and Quadrants residential units (165 units) in Ballincollig, to a European fund, for €35m, or a c 6.5% return, with income of €2.5m.

To that €35m residential sale may come a further €20-22m sell-off to new investor/owners of the retail element of the Ballincollig Town Centre, expected via Savills and Lisney, but delays in its placing for sale mean any transaction will now turn up in 2019 figures. Dublin has seven of the top ten deals of the year to date, according to Cushman & Wakefield.

However, “another key story of 2018 is the progressing pattern of rising regional investment, with a combined, €326.5m worth of capital invested in Cork, Limerick and Galway, in the nine months to September.”

This, they say, “is significantly above the total volume recorded in the region for 2017 as a whole, of €274m.”

Cork led that regional surge, with €208m transacted by end of September, passing its 2017 volumes, spread across office and residential asset disposals.

Nationwide, and especially in Dublin, the office sector was the dominant story of 2018, both in total value and volume of deals and circa €518m transacted in the capital’s secondary and suburban markets by Q3, with one of the top deals being Belfield Office Campus, D4, bought for €90m.

Jonathan Hillyer, director of investments, Cushman & Wakefield, said “after the buoyant performance of rental growth and yield compression, in recent years, the story of 2018 is more one of stability, most notably in the Dublin office market. The combination of this renewed stability, and the positive outlook for the Irish economy, will position Ireland well in the international markets.”

Outside of the office sector, mixed-use, residential and retail assets accounted for 14%, 13% and 13%, respectively, in the year to date. Close to €1bn is estimated to have been available on the market at the end of September, Mr Hillyer adds, saying there’s potential to reach €3bn by Q4, which “will mark a sixth consecutive year of activity, above the long-run, annual average of €1.1bn, and also the 10-year annual average of €1.9bn.