Irish investors are on target to invest EUR 12 bn in commercial property this year despite the slowing economic conditions in Ireland and lower returns on real estate compared to the last few years. The mid-year Irish Investment Market Bulletin from CB Richard Ellis suggests the demand for property investments continues unabated among Irish investors and they are moving further into Continental Europe in search of new opportunities.
Irish investors are on target to invest EUR 12 bn in commercial property this year despite the slowing economic conditions in Ireland and lower returns on real estate compared to the last few years. The mid-year Irish Investment Market Bulletin from CB Richard Ellis suggests the demand for property investments continues unabated among Irish investors and they are moving further into Continental Europe in search of new opportunities.
The report indicates that Irish property investment spend in 2007 will match last years record EUR 11.9 bn despite the fact that spend in both Ireland and the UK specifically will be somewhat less than last year. Instead there is an increased Irish focus on property investment in the Eurozone and US.
Irish property investors - though still a relatively small group in the overall market - have been very active in Europe in recent months. Irish entrepreneur Derek Quinlan's real estate and investment advisory group Quinlan Private beat off stiff competition last week to acquire the Jurys Inn hotel chain for almost EUR 1.2 bn. Back in April, a group of investors led by Quinlan Private, and Israel's Ahouvi Group completed the acquisition of a portfolio of 47 Marriott hotels in the UK for EUR 1.1 bn.
And this week, Bank of Ireland Private Banking acquired a 50% interest in Liverpool's New Mersey Shopping Park from Hercules Unit Trust (HUT) for £209 mln (EUR 310 mln), while unnamed Irish investors bought the Holland Casino property in Amsterdam for EUR 63 mln - 50% more than the original asking price.
One of the key focuses for the Irish is Germany, where the economy appears to be recovering after years in the doldrums. For instance, CMC Capital, the property investment subsidiary of Cork-based chartered accountants Crowley & McCarthy, has invested more than EUR 500 mln in German property on behalf of Irish high-net-worth clients.
The new report suggests that there is an acceptance amongst Irish investors that total returns from commercial property in Ireland, the UK and in most European property markets are going to be lower in 2007 than they have been prior to this. 'One would expect that rises in borrowing costs would weaken investor appetite but this has not materialised. In fact, it does not appear to have dampened investor demand for property investment opportunities to any significant degree, although, according to CB Richard Ellis, buyers are now much more selective'.