German investors dominate commercial property this year

German investors were the biggest participants in Ireland’s commercial property market in the first nine months of the year, accounting for more than a fifth of all transactions so far. US and Irish buyers were also very active, with significant activity continuing in the private rented sector market.

Investment market analysis by BNP Paribas Real Estate Ireland (BNPPRE) found that German investors accounted for €700 million of the €3.5 billion in sales, or about 20 per cent, transacted in the first nine months of the year in the Irish market.

"With travel restrictions easing, it is no surprise to see increased activity, with notable Q3 transactions involving foreign investors including German, US, French and Dutch buyers," said Kenneth Rouse, managing director and head of capital markets at BNP Paribas Real Estate. "Favourable demographics, the resilience of the economy, strong vaccination uptake, and the euro are just some of the factors that help Ireland's enduring appeal as a good place to deploy capital."

Nutgrove deal

A notable recent deal was the acquisition by Munich-based investor AM Alpha of the Nutgrove Retail Park in Dublin’s Rathfarnham in an off-market trade deal for €66.3 million.

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Overall, research from the real estate group found that the third quarter of 2021 was the busiest in the commercial property market in six years, with turnover up 12 per cent on the five-year average.

Investment doubled from €1.8 billion in the first nine months of 2020 to €3.5 billion in the same period in 2021, while there were 140 investment deals in the first nine months of 2021, outstripping the full-year figure for 2020 (138).

These findings echo a report from CBRE earlier this week, which found that the Irish commercial property market has been “phenomenally busy” in the past two months.

PRS dominates

The private rented sector accounted for more than half, at 52 per cent, of all sales in the third quarter, and 54 per cent of activity in the first nine months of the year, with €415 million worth of residential assets purchased. Indeed six of the top deals in the third quarter were in residential.

This heightened activity is despite the introduction of a special 10 per cent stamp duty rate on the bulk-purchase of traditional housing last May.

The office sector experienced a lull, however, in the third quarter, with just €128 million worth of offices trading, the lowest quarterly total in five years. Whether this is down to the pandemic-related rise in remote working remains to be seen.

According to John McCartney, director of research at BNPPRE, the true impact will not be known for some time, but he notes that, “independent of other influences, Ireland’s rapid economic rebound and certainty on the corporation tax rate should help to underpin office demand”.

Looking ahead, with a €2.3 billion pipeline of assets on the market, McCartney expects overall commercial property activity to remain strong in the fourth quarter and into 2022.