International funds snap up offices here
ALMOST two in every five offices in Dublin have changed ownership in the past six years as international investors continue to splash their cash on property in the capital.
European investment and retirement funds are taking an increasingly large hold in the Irish property market, a new report shows.
The Ireland Investment Report 2019 by property company Savills has found that 2018 was a particularly bumper year for investment, with ten transactions of €100million or greater, compared with just three in 2017.
Ireland remains an attractive property investment hub
‘Exceptional rate of job creation’
with €8.6billion being invested in Irish property since the start of 2013.
The biggest purchase of the year was the €175million spend on the Heuston South Quarter Offices by CK Hutchison Holdings, the company behind the Three telecoms brand. Offices accounted for the largest share of investment spending on property, with €1.48billion being spent on offices out of a total of €3.72billion invested in property in Ireland last year.
According to the report, investor appetite for offices reflects the strength of the growing jobs market: the number of office workers grew sharply to almost 260,000 last year – the highest it has ever been – and looks set to continue to grow.
It wasn’t just the capital where office activity was on the rise, though. There was a sharp rise in regional office sales last year, with 24 buildings outside Dublin changing hands.
The largest single office transaction outside the capital was the €25million Plassey Portfolio which contained three buildings in Limerick.
There were also two deals of over €20million in Galway during the year, and a €16million portfolio in Letterkenny, Co. Donegal was bought by Yew Grove REIT. In Cork, more than €58million of incomeproducing office property was purchased in 2018, with ten properties trading. If anything, a scarcity of modern offices has been the impediment to growth in the Cork investment market.
Director of research at Savills, Dr John McCartney, said the investment market in Ireland has benefited from favourable monetary conditions – with continuing low interest rates across the world driving capital into real estate. But the strength of investor interest in Dublin office property also reflects surging demand for business space due to a rapidly expanding and increasingly globalised domestic economy.
‘By any international comparison, Ireland’s rate of job creation has been exceptional in recent years, and 30% of all the jobs created last year were Dublin office-based positions. This has generated enormous demand for office space in the capital and, although new buildings are emerging, supply has been unable to keep pace,’ Dr McCartney said.
‘As a result, the vacancy rate has been pushed to a 20-year low. Inevitably, this underpins rents and values.’