More prime supply needed as Irish investment picks up

More prime property assets for sale are needed to meet rising investor demand in Ireland, according to CBRE.

The property adviser said that €336 mln of investment properties traded in the Irish market during the first three months of the year.

The final total was higher than provisional estimates produced by CBRE in advance of the end of the quarter. In total, 21 investment transactions of more than €1 mln were completed in the Irish market during Q1 2013.

This quarterly volume compares with €545 million invested in Irish commercial real estate in full-year 2012 and is significantly higher than the sum invested in each of the previous three years.

Notable investment transactions completed in the first quarter of 2013 include the sale of the Bishop’s Square office building in Dublin 2 to US investor King Street for €65 mln, reflecting an initial yield of 9.8%; the sale of a portfolio of four office buildings in the Irish Airlines Pension Fund and the sale to German fund GLL of two adjoining buildings on Grafton Street for a reported €40 mln.

Offices accounted for more than 50% of the Irish investment transactions in excess of €1 mln which were signed in the first three months of 2013.

The weight of demand for prime properties in the Irish market is continuing to impact positively on yields. CBRE intends to adjust its prime yield series again in April to reflect the prevailing appetite for prime real estate. CBRE say that prime office yields in Dublin are now in the order of 6.5% while prime high street retail properties are yielding approximately 5.75%.

Caroline McCarthy, executive director and head of the capital markets team at CBRE Ireland: 'Improving economic conditions coupled with the availability of attractively priced real estate in Ireland is continuing to attract significant overseas appetite and this is fuelling the investment sector and leading to some price rises for prime properties. A number of the assets that signed during Q1 were brought to the market several months ago so at this juncture, we need to see more prime property assets being released for sale to satisfy current volumes of demand.’