“All -time low in investment activity in opening quarter, with expectations of a rebound as lending conditions improve.”
Statement by Sherry FitzGerald Commercial Research
Tuesday, April 9th, 2024
Sherry FitzGerald, Ireland’s largest estate agent, reported today (Tuesday, April 9th, 2024) that the first three months of 2024 saw investment turnover in the Irish commercial property market reach €163 million, the lowest quarterly level recorded since records began in 2013. A total of 20 investment transactions closed during the quarter. Although this is lower than the volumes witnessed in recent years, it is greater than those recorded in mid-2020 when the economy was in lockdown.
It is interesting to note that investment activity during the quarter was primarily driven by smaller lot sizes, reflecting the current interest rate environment with key lending rates now at the peak of the current cycle, while a commencement in base rate reductions is expected in the second half of 2024. In particular, 80% of all transactions during the first three months of 2024 were valued between €1 million and €10 million. Furthermore, there were no transactions exceeding €50 million in value.
According to Jean Behan, Head of Research, Sherry FitzGerald; “Following a decade where the main refinancing rate was maintained below 1%, it is not surprising that the successive hikes in interest rates since July 2022 had an impact on investor activity. Now that inflation in the Euro Area has eased considerably, it is widely anticipated that the ECB will begin a series of interest rate cuts in the second half of the year, which should help the investment market rebound later in the year.”
The largest transaction during the quarter comprised the off-market sale of a 104-unit fully let residential portfolio in Shackleton Park, Lucan by Angelo Gordon and Carysfort Capital to KGAL’s Core 5 LIFE for in the region of €42 million. Residential transactions accounted for 27% of total turnover during the three-month period. Demand for retail assets remained robust comprising 42% of total capital spend, including two retail park sales that closed during the quarter. The largest being the sale of Gulliver’s Retail Park for approximately €30 million, while French investor Iroko Zen acquired Kilkenny Retail Park from Aviva’s Irish Commercial Property Fund for €25 million.
Mixed use assets represented 18% of investment turnover during the three-month period, including the sale of 21-24 Capel Street, a five-storey over basement office building with ground floor retail accommodation, for approximately €16 million. A further 7% of total spend related to office assets, while industrial assets accounted for 5%.
Commenting on market activity, Ross Harris, Director, Commercial & Residential Investment, Sherry FitzGerald said “Looking to the remainder of 2024, International institutions are poised to increase their activity in the Irish market as their required return rates become more achievable with a reduction in base rates. With the anticipated interest rate cuts, along with several transactions that are currently sale agreed, we expect to see an increase in investment activity as we move through the year.”
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For any further information, please contact:
Jill O’Neill
PR Director
Sherry FitzGerald Group
Ph: 01 2376 500 / 086 252 3277
