The Irish property market could be showing the way forward for the commercial property in 2017 as a blend of demand from investors and large international corporations are expected to push values upwards for the next six months.
This is what has been conveyed from CBRE’s first bi-monthly report for 2017. There will be a considerable change in transactional activity across the commercial real estate market towards the last 6 months of the year compared to the first 6 months as “considerable activity behind the scenes” starts to move.
Major corporations such as Facebook, AIB, IBA, New Relic, Allergan, Evershads, Indeed, WeWork and Huawei, are actively looking for office accommodation.
Currently there are 27 office schemes under construction according to CBRE, located in centre of Dublin. The plans total to 360,000 sqm, with the expectation that the number of new planning application for office space will reduce due to the amount already made available.
Marie Hunt, who is CBRE’s head of research, whilst viewing her expatiations for the market said, “Appetite for prime investment opportunities in the Irish market has intensified noticeably over recent months, with international core capital remaining active buyers, which could actually lead to some further hardening in yields for prime high street and prime office assets in due course.”
She added about Dublin and the office market, “The occupier markets continue to perform well, buoyed in particular by the strength of continued employment generation in the Irish economy. Worthy of particular mention is a notable increase in active requirements for office accommodation in Dublin over recent months, with several mandates in play at present including some that are specifically Brexit-related. Once Article 50 is officially triggered, demand is expected to escalate further.”
At the same time, the MSCI Irish Property Index, shows total returns in the Irish commercial property market reached 12.4pc in 2016. CBRE states that in the last eight quarters, the market pace as slowed to “more normalized trading levels.”
Moreover, the report added that, “the biggest frustration,” that the market faced, is the “scarcity of prime product to satisfy investor appetite.”
Last year saw recorded sales come to €4.5 bn in the Irish commercial real estate market. This was a collection of highly valuable assets being brought such as the, Liffey Valley Shopping Centre and Blanchardstown Centre. The recorded sales are unlikely to be matched next year, as the number of significant “trophy” sales has reduced.
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