The newly released bimonthly report by CBRE property specialists anticipate a flurry of activity across the Irish commercial property market in the coming months.
The quarterly report by the property consultants CBRE Ireland team was published in May 2019. This useful report has become a reliable indicator of market performance in regard to the commercial real estate market.
Strong Market Ahead
According to the report, activity has been increasing across the sector and is expected to swing into high gear during the summer season ahead. Investor demand remains strong, and off-market activity appears encouraging.
CBRE property consultants anticipate strong transaction activity this year with a number of considerable assets currently on the market and more expected to be released in the next few months.
In terms of commercial property, the report found a slackening of rental yields for retail warehouses and shopping centers, mirroring a pattern seen in the UK and Europe. Office and industrial yields prove to be consistent in Ireland. This is unsurprising due to the ever-present demand for office space, especially in the capital. It has been reported that 107,000 square meters of office space was let in the Dublin area, with approximately 370,000 square meters currently in demand.
Growth in the tech and finance sectors have likely driven up demand for office rental, as well as firms looking to potentially relocate in the event of an unfavorable Brexit deal.
Rental Rates Hold Steady
When it comes to rental accommodation, average rates within Dublin remained stable at €700 per square meter. However, prime rental rates in the suburbs did show a slight rise to €317.42 per square meter, attributed to increasing demand.
The CRBE report figures show rental rates in the north suburbs averaging €226 per square meter, and west suburb rental rates averaging approximately €193.68 per square meter.
The recent positive market findings by CRBE were backed up by the recently published MSCI Irish Index, which illustrated that the Irish commercial property market achieved a 7.8% total return at the end of the first quarter of 2019.
Build to Rent Heats Up
While criticism has been growing around the Build to Rent (BTR) sector and institutional investment in housing developments there remains a persistent appetite for this type of investment. BTR accounted for 30% of overall investment in Ireland in 2018, a figure that is anticipated to grow for 2019. CBRE forecasts predict a growth in BTR to reach €6.3 billion, up from the €5.3 billion reported last year
CBRE says that while the Build to Rent sector may not be the panacea to Ireland’s housing crisis, it still has a meaningful role to play in helping to address the country’s housing supply-demand imbalance by providing much-needed rental accommodation & associated amenities.
The Irish government has encouraged foreign investment in the property market, so it is not surprising to see that 32% of the BTR capital originated from the United States, 24% from Europe, 22% from domestic investors, and 12% from Canada.
CBRE also reported that demand for student accommodations has increased in Galway and Cork. The property experts also believe that shared living and co-living trends are likely to grow significantly in the coming year.