Over 1.1 million square metres (sq m) of modern office space has traded in Dublin since the beginning of 2013 – equivalent to one-third of Dublin’s entire office stock.
In the Central Business District the figure is even higher, 42% of office space has changed ownership in the last four years.
This is according to a new report from Savills on Ireland’s property investment market released today.
The report estimates that over the 2013 to 2016 period, the aggregate value of office investment transactions in Dublin amounted to almost €6.3bn.
After very active trading in offices between 2013-2015, and with the construction pipeline only now beginning to deliver new-builds, fewer prime office investment opportunities came to the market last year. Consequently offices slowed from 48% of turnover in 2015 to 34% in 2016.
Savills notes that the re-emergence of forward-funding deals will provide opportunities for investors. Under these arrangements investors agree to buy completed developments before or during the construction phase.
Elsewhere in the report, Savills observes that the recovery in Ireland’s consumer economy lagged the recovery in the corporate sector. As such retail property investment took longer to re-ignite after the crash.
However, investment spending on retail assets has increased steadily over the last four years and actually surpassed spending on office blocks.
Looking at the Irish property investment market as a whole Savills says that while demand for income producing property remains robust, the liquid market created by mass post-crisis deleveraging is a thing of the past.
They predict that notwithstanding the continued opportunities for investors to develop their own buildings, to forward-fund developments and to purchase re-trades, more normalised supply levels will see investment settle back to a sustainable €2.5bn-€3.5bn per annum over the coming years.
Director of Research at Savills Ireland, Dr. John McCartney says, "Given the nature of our economy, which is increasingly based on technology and business services, office space is a critical factor of production. During the economic crisis office blocks could be picked-up cheaply and this caused assets to be traded at a ferocious rate."
He added, "Now that the economy is back on a strong growth trajectory the appeal of these assets has widened and core institutions such as pension funds and REITs have become key buyers.”
Source: www.businessworld.ie
