Savills Ireland today released figures that showed €1.5bn was invested in the Irish property market in the second quarter of 2021, bringing total year-to-date investment volumes in Irish real estate to €2.7bn. This represents the second highest level on record and 170% ahead of the first half of 2020.
Investor appetite was strong across the board but the industrial sector was the stand-out performer of the quarter. In total, €325 million worth of industrial assets traded giving the sector a 22% market share, well ahead of the long-run average of 4%. With a tight vacancy rate of 1.3% and strong occupational demand, investors are seeking exposure to the sector which has proved resilient during the pandemic.
An additional €757 million was invested in PRS assets this quarter, which brought the total year-to-date PRS investment volumes to €1.5bn – 25% higher than full-year investment into the sector in 2020. The market share of PRS fell slightly from 58% in the first quarter to 51% in the second quarter but still accounted for four of the five largest deals of the quarter.
The role of the private rented sector in unlocking new supply is evident with 90% of residential units being forward purchased compared to 10% of transactions consisting of standing stock. Savills say without a healthy investment base giving certainty for developers, it is highly unlikely that this construction would be happening.
A total of €311 million was invested into office assets during the quarter. The major deals in the quarter were Deka’s €164 million purchase of Block A, Riverside IV in Dublin 2 and Corum’s €60 million purchase of One Navigation Square in Cork. Block B Liffey Valley also sold, trading for €18 million and included life sciences tenants such as AstraZeneca and Abbot. The life sciences sector is predicted to be one of the next big growth sectors of the global economy as Ireland emerges from the pandemic.
Commenting the figures, Divisional Director of Investments at Savills, Brendan Delaney said, "Investment in the office sector has been hampered by Covid-related interruptions to the construction pipeline and occupational market. As the year progresses and offices reach completion lease-up we would expect to see a pick-up in investment volumes in the sector. Therefore, while the PRS share of the market at the moment is relatively high, this will balance out as the year progresses with significant office and retail assets set to transact in the second-half of the year."