Commercial property specialists CBRE last week released their first bimonthly report for 2018, focussing on trends and transactions in all sectors of the Irish commercial property market during the first two months of the year and their outlook for the months ahead.
The property experts say all sectors of the Irish commercial property market have had a busy first two months. In addition to a carryover of transactions from 2017, some of which completed during January and February, CBRE say there has been considerable work underway in each sector of the market, preparing assets that will be offered for sale over the coming months.
Following a year in which more than €2.5 billion traded in the Irish investment market and total returns reached 6.4% according to the MSCI Irish Index, the opening months of 2018 has seen several transactions carried over into the new year, some of which have now signed or are close to completing.
CBRE say the supportive economic backdrop and strength of underlying occupier market activity continue to attract investors from a range of jurisdictions, with Ireland’s comparatively attractive yield profile also encouraging investors to consider opportunities in the Irish market.
The commercial property specialists claim that although sourcing core product and deploying capital remains challenging, a number of assets have been formally released for sale since Christmas (both on and off market) while others are being prepared for sale later in the year, which should alleviate supply pressures somewhat.
Following a strong year in 2017 in which more than 331,000m2 of transactions were recorded, the first two months of 2018 has seen continued momentum in the Dublin office market. Several transactions that carried over into 2018 have been signed in recent weeks while others are nearing completion and will provide a boost to first quarter take-up volumes.
The report shows that demand remains robust with a number of new requirements having materialised since Christmas, copperfastening already strong requirement volumes.
In line with the year just gone, CBRE claims 2018 is likely to be largely characterised by the expansion of existing occupiers as opposed to take-up by large-scale new entrants. CBRE also expect to see some further Brexit-related moves solidifying over the course of the coming months.
The increase in large requirements activated over recent months (many of which don’t need to move into new premises for a number of years yet) as well as the completion of a number of significant pre-lettings in recent months, has in turn provided the impetus for the next wave of development activity to commence in the capital.
According to CBRE research, the extent of new office supply coming on stream over the next three years appears well controlled at this point with funding for speculative development remaining elusive despite the current underlying market dynamics.