Dublin ranks third out of 31 cities for real es­tate in­vest­ment

The Irish Times - Business - - BUSINESS NEWS - PETER HAMIL­TON

Dublin ranked in third place out of 31 Euro­pean cities for real es­tate in­vest­ment de­spite ques­tions sur­round­ing over­sup­ply pick­ing up in the of­fice mar­ket, a re­port shows.

Lis­bon, Ber­lin and Dublin are con­sid­ered the best bets in Europe for real es­tate in­vest­ment and devel­op­ment next year based on fun­da­men­tals in the mar­ket and rental growth prospects, ac­cord­ing to the 2019 PwC/ULI Emerg­ing Trends in Real Es­tate Europe re­port.

Dublin has moved up the rank­ings – from sev­enth place last year – be­cause of the rapid ex­pan­sion of tech­nol­ogy com­pa­nies in the city. Face­book, Google and other tech­nol­ogy com­pa­nies swal­lowed up 43 per cent of space in the first half of 2018. One spin-off has been the in­ter­na­tion­al­i­sa­tion of Dublin’s work­force, the re­port said, which is be­hind the take-off of build-to-rent hous­ing. “Though lo­cal gov­ern­ment has been crit­i­cised for lack of in­fra­struc­ture in­vest­ment, the de­mand is open­ing up the city for mixed-use ex­pan­sion,” the re­port added.

While of­fice yields have fallen to about 4 per cent for prime as­sets, Ilona McEl­roy, PwC Ire­land real es­tate tax leader, notes rents have sta­bilised around €700 per sq m.

Ad­di­tion­ally, de­spite be­ing sev­eral years into its re­cov­ery, Dublin is said to have po­ten­tial, with sites around the air­port and the port tipped for strong growth in lo­gis­tics.

For Brexit re­lated moves, Dublin, along­side Am­s­ter­dam, is seen as of­fer­ing bet­ter value than Euro­pean lo­ca­tions like Paris and Ber­lin. “In­vestors are be­com­ing more cau­tious, and in­vest­ment and devel­op­ment pref­er­ences are more and more driven by real es­tate fun­da­men­tals such as the eco­nomic growth prospects and health of the lo­cal oc­cu­pier mar­kets,” said ULI Ire­land chair­man John Bruder, who flagged Brexit as a clear ex­am­ple of that.

Nev­er­the­less, Lon­don held up well in the re­port although 70 per cent of se­nior real es­tate pro­fes­sion­als ex­pect the UK’s abil­ity to at­tract in­ter­na­tional to fall fol­low­ing the March 2019 Brexit dead­line.

Cur­rent cy­cle

Against the back­drop of a chal­leng­ing en­vi­ron­ment, in­vestors are in­creas­ingly turn­ing to as­set classes less likely to be af­fected by the cur­rent cy­cle.

Al­ter­na­tive in­vest­ment, such as in co-liv­ing, lo­gis­tics and re­tire­ment liv­ing, are be­gin­ning to dom­i­nate the in­ten­tions of real es­tate ex­ec­u­tives.

“The last five or so years has seen a re­mark­able shift by in­vestors to­wards al­ter­na­tive real es­tate, or ‘niche’ sec­tors. In part this is clearly driven by where we are in the cy­cle and the search for in­come. But it is also a re­sponse to the in­no­va­tion that is dis­rupt­ing the more tra­di­tional sec­tors and a num­ber of long-term trends such as de­mo­graph­ics and ur­ban­i­sa­tion,” said PwC Ire­land real es­tate leader Joanne Kelly.

Dublin has moved up the rank­ings – from sev­enth place last year

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