The average value of transactions in the Irish commercial property market swelled to €30.1 million in the first three months of the year, a record high for a first quarter, as investment levels surged despite cautious investor sentiment, a report by Savills has highlighted.
In total, €933 million worth of deals took place between January and March, the property adviser said on Tuesday, 10.1 per cent ahead of the first quarter of 2022 and 19.4 per cent ahead of the five-year average.
However, despite the “strong performance” of the commercial market to start the year, Savills said that it expects “investor sentiment to remain cautious as the market continues to adjust to the higher interest rate environment.
The property agent previously warned investors to expect a “quiet” first half of 2023 amid the wider economic slowdown and tighter funding streams. But John Ring, director of research at Savills Ireland, said that the market’s buoyancy in the first quarter was “a testament to [its] resilience and attractiveness”.
Some of the biggest deals – most of which (57 per cent) took place in Dublin – in the quarter include the acquisition of the Valley Healthcare platform by KKR for €300 million, the sale of Greenogue Logistics Park to Ingka Investments for €110 million, and the sale of Opus in Dublin’s south docklands by PRS Property to Pontegadea Investments for €101 million.
Savills said that buyers from the United States (34 per cent) represented the largest share of “active market participants”, followed by Europe (24 per cent), Ireland (22 per cent), and the UK (11 per cent).
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Mr Ring said that the first quarter was driven largely by “the increasing participation of international investors” in the Irish market, demonstrating “continued confidence” in the outlook for the sector.
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There have, however, been some early warning signs of a downturn, particularly in the office market in Dublin. Commercial estate agent CBRE reported last month that take-up of office space in the capital had totalled 26,437 sq m in the first quarter of 2023, down 42 per cent on the same three-month period last year.
The total was also 54 per cent below the 10-year average of 57,000sq m. However, the firm noted that “while this is a substantial fall, we do not believe it to be symbolic of what to expect for the coming year” with take-up levels expected to improve in the second half.
