Irish and American buyers dominate Irish investment market

Investment turnover in Ireland has reached €1.09 bn after the first three quarters of 2013, according to new research from Savills.

The international real estate advisor recorded turnover of approximately €480 mln in the third quarter from 22 investment property sales. This compares with a transaction volume of approximately €110 mln in the year-earlier preiod.

The top deals completed in Q3 include the purchase of the Opera Portfolio by Kennedy Wilson for €306 mln, consisting of 14 properties located across Ireland. These include Stillorgan Shopping Centre, Merchant’s Quay Shopping Centre in Cork, KPMG’s Dublin office on Stephen’s Green and the Bank of Ireland headquarters on Mespil Road.

Further significant transactions include the sale of New Century House in the IFSC for a price in the region of €28 mln; the sale of 87-89 Pembroke Road Ballsbridge to Irish Life, for €15.5 mln and the sale to CAPREIT of four Dublin multi-family assets for a combined price of approx €43 mln.

Irish and American buyers continue to dominate the market, respectively accounting for approximately €350 mln (32%) and €485 mln (45%) of total 2013 turnover to date. Larger lot sizes that have come to the market so far this year have attracted interest from both institutional and private equity investors.

Fergus O’Farrell, investment director at Savills Ireland, said Ireland was becoming increasingly attractive as an investment location for domestic and international core and opportunistic buyers on the back of improving economic data and Ireland’s impending exit from the bailout programme at the end of this year. 'In addition we are now seeing scale returning to the market, with significant demand for lot sizes from €100 mln to €400 mln. Kennedy Wilson’s purchase of the Opera portfolio for €306 mln is the first deal of this scale in the current cycle, and this was competitively bid. Several other portfolios of scale are on the market or coming to the market in the short to medium term and are keenly anticipated by investors.'

In terms of asset classes, the majority of demand is for offices, with 31% of turnover in the first three quarters of the year in this sector. Investors are chasing well located third generation offices, where it is expected prime rents will increase in the next few years due to a shortage of new office developments in the planning pipeline. The firm has noted an increasing demand for apartment block sales. So far in 2013 multi-family deals have amounted to a total of €225 mln, including the sale by Savills of four Dublin multi-family assets for approximately €43 mln.

Fergus O’Farrell adds: 'Our outlook for the remainder of the year remains extremely positive with approximately €550 mln of stock currently available on Ireland’s investment market. We expect to see €600 mln of property come on the market before year end so that turnover may well exceed €1.5 bn in 2013, a level which has not been reached since the highs of 2007.'