IRISH and international investors have pumped just over €1billion into property investment in Cork over the past five years, confirming it as the top Irish city outside of the capital for funds.
And, while Covid-19 will negatively affect investment in the short-term, “Cork is very well placed to secure continued strong transactional activity in the medium term,” says international agency CBRE’s Cork office MD Brian Edwards.
CBRE has totted over 90 individual transactions in Cork, or over 17 per year on average over the five year period worth in excess of €1 million, and right up to the sale of the Elysian at close to €90 million.
This excludes the very substantial sub-€1m investments, many of them made for pension purposes.
It reveals €1.001bn was invested in Cork, along with €269m in the same time span in Galway and €252m in Limerick between 2015 and end 2019.
At a time of strong construction supply of new assets, especially offices, CBRE says “the property investment market in Cork has witnessed exceptional growth in recent years, attracting domestic and international interest on a large scale. Cork is holding its own in every respect and is leading as Ireland’s top city within which to invest outside of the capital.”
While Dublin continues to attract the vast bulk of institutional investment, representing 88% of the total Irish market from native, UK, European and US investors, “as a city, Cork has capitalised on its strengths, echoing the positive trajectory of the Dublin market,” says today’s CBRE report.
Reviewing the surge in investment over the five-year period to post-crash recovery, CBRE notes the first investments of scale into Cork first occurred with the likes of NAMA-driven sales of large retail portfolios, such as Project Acorn and Project Spectrum, which saw two of Cork’s prime shopping centres — Blackpool Shopping Centre and Douglas Court Shopping Centre trade to US private equity investors Varde.
Also sold was the Wilton Shopping Centre, bought by US investment managers York Capital with Clarendon Properties for c €70m, while Clarendon also purchased the core mall units of the Merchant’s Quay Shopping Centre in 2017, via CBRE and Savills.
That same active year saw the just-completed mixed-use Capitol building bought by German pension fund Real IS for €46.5m, just after its developers JCD Group sold its office development One Albert Quay to Green REITR in ’16 for €58m (One Albert Quay since re-traded when Henderson bought Green REIT.
Commenting, CBRE’s Mr Edwards says the Capitol sale had proven that “high-profile European investors were eager to invest in occupational and investment markets outside of Dublin.
The sale of this newly constructed building was no doubt a boost for construction in Cork, underpinning the belief that quality buildings would attract high calibre investors to the city.”
Also notable was the emergence of multi-family unit (PRS) investment as a new asset class in Ireland, with many hundreds of apartments sold en bloc in Cork, for tens of millions of euros: residential accounted for approximately 60% of investment spend in Cork in 2018, for example, due to several high-profile sales such as the Elysian, from Blackstone to Kennedy Wilson.
According to CBRE, investment volumes for Cork for the year to end 2019 topped €300m, a 21% year-on-year increase, predominantly led by office and retail transactions, such as the €56m sale of Mahon Retail Park.
Other agencies suggest the total Irish investment market for 2019 was c €7.38bn, up 97% on 2018 due to a number of ‘mega deals.’
CBRE was involved in €175m of Cork’s investment transactions in 2019 (including O’Callaghan Properties’ Half Moon Street site, anchored by Apple to Kennedy Wilson for €36.3 million) and “new opportunities are arising year-on-year. With this, we expect to see continued strong transactional activity and new investors emerging in Ireland’s second city,” they say.
So far this year, they tally three Q1 €1m-plus Cork investment deals, combined worth over €25m.
However, while welcoming the broadening of the investor base and the confidence new investors have in Cork as a viable investment alternative to Dublin “it is inevitable that transaction volumes in Q2 will be negatively impacted in the short-term as investors adopt a ‘wait and see’ approach in light of current market uncertainty around Covid-19,” says Cork office MD Brian Edwards.
He asserts that ”while Covid-19 will negatively impact investment activity in the short-term, Cork is very well placed to secure continued strong transactional activity in the medium term.”
DETAILS: CBRE 021-4917255