Last year was an extremely active year in the Irish commercial property market and 2017 is shaping up to be a busy, albeit different year for the sector.
This is according to commercial property specialists, CBRE who have today released their 'Outlook 2017 annual report' containing their final year figures for transactional activity in each sector of the Irish commercial property market in 2016 and their predictions for each sector in the year ahead.
The report shows 223 investment transactions of greater than €1 million were completed in the Irish market during 2016, totalling more than €4.5 billion between them. Investment spend surprised on the upside, skewed by a number of trophy transactions including the sale of both Blanchardstown Town Centre and Liffey Valley shopping centres in West Dublin. Indeed, 50% of investment spend last year comprised retail investments.
CBRE expect to see continued appetite for Irish real estate from core buyers throughout 2017 with the biggest challenge being a scarcity of prime product to satisfy the volume of bidders.
Against this backdrop, the property consultants expect that forward funding of new development will become more prevalent in the market this year. Total returns, rental growth and investment spend volumes are all expected to be lower in 2017 than last year.
According to the report, 66 hotel sales concluded in the Irish market in 2016 totalling over €805 million between them. This marks the third consecutive year in which more than 60 hotel transactions were completed in the Irish market in the calendar year.
Some slowdown in transactional activity is expected in the hotel sector in 2017 following two record years. Some Dublin hoteliers may decide to capitalise on the demand for hotels in the capital and bring hotels to the market in advance of an increase in new supply coming on stream from 2017 onwards.
Furthermore, 30 Dublin pubs were sold in 2016, totalling more than €43 million between them. This was a lower volume of pub sales than anticipated as improved trading conditions made some vendors reluctant to sell. The average Dublin pub price in 2016 was €1.44 million and this is expected to rise further this year.
Up to 40 pubs are expected to change hands in Dublin in 2017 and limited supply in the city centre is expected to drive demand for suburban pubs over the next 12 months.
Office take-up of more than 245,000m2 was achieved in Dublin in 2016 in 264 individual transactions. The reports shows147 of the transactions in 2016 were to Irish companies while 58 were to US companies and 33 were to UK companies. Prime office rents in Dublin are expected to reach the peak of the current cycle in 2017.
Managing Director at CBRE Ireland, Enda Luddy said, "To say that 2016 was a year of surprises is clearly an understatement. The unexpected outcome of the Brexit referendum last June and in turn the US election result in November took the world by surprise. These seismic events will in due course influence the direction of economies the world over including Ireland’s and by default will have implications for the Irish property sector."
He added, "While the Brexit result will, for the most part, be negative for the Irish economy and lead to GDP forecasts being downgraded somewhat, one of the sectors of the Irish economy that will potentially benefit is the commercial property sector if anticipated Brexit-related relocations from London materialise as we expect they will in 2017."
Source: www.businessworld.ie
