Liquidity build-up to see property investments rise

A view of the new Penrose Dock developments under construction in Cork. Picture: David Creedon

INVESTMENT funds are increasingly looking for opportunities to rent social housing units in bulk to Irish local authorities and housing associations, with demand at close to 70,000 households nationally.

The funds’ interest in multi-let investments into the social housing sector has picked up “since the new Government reiterated their commitment to increase the volume of social housing provision,” notes Marie Hunt, who is Head of Research at CBRE Ireland.

In a bi-monthly research report issued this week, CBR say that up to €1bn in Irish property investment assets is due to come to market in coming months, many of them in the PRS/multi-family sector.

A view of a section of the new Horgan's Quay development which is still under construction. Picture: David Creedon

And, despite the impact of Covid-19 over the past six months across a variety of market sectors, some exacerbating pre-existing structural issues and trends, they say “the continued low-interest-rate environment coupled with unallocated capital positions means that there is now considerable investor liquidity built up and looking to deploy into Irish real estate.” 

While office activity slumped to new take-up lows in the past few months, some deals are progressing. CBRE say they expect a pick-up in Q3, with deals in negotiation, but “large-scale expansion and relocation decisions are expected to remain firmly on hold until such time as decision-makers can travel and companies can determine their long-term headcount and space requirements,” they state.

In Cork, where office construction has been at very high levels in the south and north quay as well as at Ballincollig, activity has been subdued in both occupational and investment sectors. "Having said that, a number of occupier transactions are currently in legals, which will provide a boost for this market in due course. There has been a welcome increase in office enquiries in recent months, albeit it will likely be later in 2020 or early 2021 before these translate into completed leasing deals,”  Ms Hunt predicts.

Although the latest set of Government Covid-19 restrictions on economic activity and overseas travel restrictions limits the ability of some to travel to Ireland to inspect buildings and conduct due diligence, “vendors and agents have embraced technology and devised alternative solutions to enable potential occupiers and investors to review opportunities remotely,” CBRE say, while adding that “domestic investors and entities with decision-makers in-country will clearly have a distinct competitive advantage over the coming months.”

Holding out that occupier demand may rebound in 2021 "when travel restrictions are lifted and economic activity picks up " the next couple of months could prove to be a ‘window of opportunity’ for occupiers who are in a position to take advantage of the ability to negotiate keener deals in the current climate," CBRE suggest.

With ‘the future of the office’ also in the mix, the agency notes "increased appetite for flexible office leasing solutions over recent months, from companies who are, at this juncture, unsure of their future headcount or unwilling to commit to long-term leases in the current climate."

Details: www.cbre.com