Property deal total to hit €2bn by end of 2017
for financial services firms planning to relocate staff post-Brexit.
However, it found that investor sentiment for retail waned in Q3, although rental value growth remained positive, driven by prime Grafton Street shops.
Lisney’s Q3 report adds: “The strength of the bull market in the last four years has created an assumption that all stock that goes on the market will sell.
“This has been exposed in recent months with a number of high-profile sales failing to complete, including shopping centres in Cork (Blackpool), Navan and Mullingar. Ultimately, these failures come down to pricing mismatches between vendors and the market as there is demand for opportunities in all sectors and across the spectrum of lot sizes.
“What is notable is a growing divergence between prime and secondary product, which had become too narrow in recent years.”
Nevertheless retail accounted for 42pc of the value of all transactions in Q3, according to Lisney, and retail yields hardened by five basis points (bps) in the quarter to 3.2pc, also reflecting a reduction of 55 bps over 12 months. This contrasts with the office sector, where yields have remained unchanged over the 12 months at 4.5pc.
The most high-profile sale was GLL’s disposal of the AIB branch building at 100/101 Grafton Street to Irish Life for a reported €50.11m or a net initial yield of 3.4pc.
Furthermore three retail transactions accounted for €46.75m of the off-market sales.
Ms Finnegan points to a recent upsurge in off-market deals, saying: “It represents a two-fold increase on the same period last year.
“In the year to date, approximately €272m, or 21pc of total investment turnover, comprised off-market deals… Furthermore, it is also reasonable to assume, that due to the nature of off-market deals, the share of such transactions could in fact be higher.”
Interestingly at a time when some commentators have raised concerns that the stamp duty increase may dampen investor demand, at least two experts say the market may face a shortage of supply.
“Lack of supply over the past 12 months has been a key catalyst (for off market deals) ... Purchasers are now looking beyond what is available on the market and are actively approaching possible vendors in order to acquire product,” says Ms Finnegan.
Mr Lyster suggests that the shortage may lead to “further forward-funding and off-market deals in the coming quarters”.
This shortage is seen in the office and residential sectors, where demand is outstripping the supply of investment assets coming to the market.
“Given the depth of this demand, investors are being pushed to maintain and even harden yields,” Mr Lyster says.
He also says that a feature of the market in the last 12 months has been the resale of assets sold post-crash by the early buyers who purchased between 2010 and 2014.
A notable example of this in September was the return to the market of the Crampton Buildings, a multi-let retail block in Temple Bar that includes the Elephant & Castle restaurant.
In 2014 it sold for a reported €8.26m to Ardstone, and if it sells for its asking price of €11.75m this suggests a €3.49m or 42pc increase over three years. It also suggests a net initial yield of almost 5.5pc after the stamp duty increase.
Another resale expected soon is for the Department of Justice building on Stephens Green. Dublin-based investment group SW3 Capital bought it in October 2014 for €16.5m. It was recently reported that US investment group Kennedy Wilson may be about to buy it for close to its €20m asking price. A 0.18 hectare (0.44 acre) residential development site on the Swords Road, Malahide, Co Dublin has been brought to the market by CBRE for a guide price of €975,000.
The site, currently occupied by a derelict bungalow, is on the Swords Road amid a number of new and established residential developments, including the long-established Seabury housing estate.
The immediate area has experienced an upsurge in demand for large residential units, and selling agent Peter Garrigan says this holding presents an opportunity to develop a residential scheme of four large five-bedroom homes ranging in size from 183 sq m to 235 sq m.
He says: “This property benefits from full planning permission for the development of four large, detached five-bed dwellings in an intimate setting.
“We anticipate this asset will appeal to both local and domestic house builders due to its favourable grant of planning permission and the demand for dwellings of this lot size.
“Malahide continues to attract significant interest from home owners due to its proximity to Dublin city centre, surrounding amenities and facilities including Malahide Castle/ Malahide Marina and the provision of infrastructure links including the DART/ M50.”
The most high-profile sale in 2017 was GLL’s disposal of AIB’s Grafton Street branch building to Irish Life for a reported €50.11m