Ireland is ahead of Spain and Italy in the post-crisis upswing, with stronger GDP growth forecast for the next five years than for its southern European peers, according to new research from DTZ.
Ireland is ahead of Spain and Italy in the post-crisis upswing, with stronger GDP growth forecast for the next five years than for its southern European peers, according to new research from DTZ.
GDP growth for Ireland is expected to come out at 2.4% per year over the next five years, followed by Spain at 1.7% and Italy at 1.1%.
The recovery in the Irish property market is evident not only in the growth in employment and the tightening of bond yields, but also in the composition of the investor base, DTZ notes in its Q1 Foresight Report for the three markets. Private equity firms such as Cerberus, Lone Star and Patron Capital are already well established in Ireland, while sovereign investors are beginning to actively seek opportunities in the market.
Dublin is expected to show the strongest commercial property rental growth across Europe in the medium, and for all sectors. Net effective office rents in Dublin jumped 39% in Q1 2014 compared with the year-earlier period, according to figures released earlier by Savills.
In Spain and Italy, interest from opportunistic investors – particularly from the US - has increased, with many investors looking at all asset types. ‘We suspect that pricing is made on the basis of aggressive assumptions on rental growth and yield compression,’ DTZ said.
ITALY
More than €1.3 bn of the €3.6 bn in foreign capital invested in Italy last year came from North American investors. Almost €900 mln came from the Middle East and Asia, with Qatar alone spending €787 mln.
In May last year, PropertyEU revealed that Qatari investors had bought 40% of the flagship Porta Nuova mixed-use development in central Milan from Italian fund manager Hines.
SPAIN
Spain saw a 183% surge in deal value in Q1 2014 compared to Q1 2013, according to figures from Real Capital Analytics. The total volume for the quarter reached €1.4 bn, making it one of Europe’s top five investment destinations.
‘Spain is a guarantee of making money,’ Ralph Winter, founder of Switzerland’s Corestate Capital, told a recent PropertyEU briefing on distressed investments. ‘Because all these guys are there trying to do deals, the market is becoming liquid, there is demand, and after the Lone Star deal we have a guarantee of five or six years of very active trading.’
In May, US firm Lone Star and JP Morgan bought around €4 bn of Spanish property loans from Commerzbank.