There was a significant rebound in the Irish commercial property market during the second quarter, data from estate agent Sherry FitzGerald shows.
Investment activity hit €523 million, which was up from “a very weak quarter one” when investment turnover fell to €163 million, which was the lowest level on record.
The number of transactions also rebounded, with 34 sales closing during the three-month period, which was the highest number seen since the third quarter of 2022.
Sherry FitzGerald head of research Jean Behan said broadly more positive economic conditions in the quarter were behind the resurgence.
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“Stronger market sentiment was evident during quarter two as lower interest rates, a more positive economic outlook and more favourable pricing set the scene for a recovery,” she said.
“This was highlighted by the increases in both the volume and value of investments coupled with the greater number of large-scale investments during the quarter.”
Retail remained the most active sector, attracting 27 per cent of capital spend, or €143 million. This was the highest quarterly level of retail spend recorded in two years and largely reflected a number of retail park transactions.
The most significant was the acquisition of Mahon Point Retail Park in Cork by Corum for an estimated €50 million. A further two retail parks in Letterkenny and Killarney also traded during the quarter for a combined total of €40.5 million.
Office assets accounted for 16 per cent of turnover during the quarter, equating to €81 million. This was compared to capital spend of almost €13 million in the opening months of the year.
The most notable transaction was the sale of 40 Molesworth Street in Dublin 2 by State Street to Deka Immobilien for approximately €37.5 million.
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Residential assets also attracted close to €81 million of investor spend during the three-month period including the largest transaction of the quarter, comprising the off-market sale of a large apartment development in north Dublin for €70 million.
There was also renewed activity in the healthcare sector with almost €77 million transacted. This included the sale and leaseback of a portfolio of three nursing homes in Portmarnock, Portlaoise and Kilkenny by Emeis Ireland to Healthcare Activos for €56.7 million.
Sherry FitzGerald said there was a notable shift in the size of transactions that took place, with a significant reduction in the volume ranging between €1 million and €10 million to 53 per cent.
This compared to 80 per cent in the previous quarter and was below the long-term quarterly average of 63 per cent.
A further 21 per cent ranged between €10 million and €20 million in size, well above the 12 per cent average rate for the cohort. Approximately 9 per cent of transactions were valued at €50 million or greater.
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Ross Harris, director of commercial and residential investment at Sherry FitzGerald, said transactional activity across the broader Irish investment market “should continue its recovery” through to the end of the year.
He said the re-emergence of significant private rented sector transactions was “a welcome development”, indicating that institutional-style capital remains committed to supporting the Irish residential rental market.
“However, it is worth noting that residential rent caps remain a significant issue for institutional investors seeking to invest in Ireland,” he said.
“Looking to the remainder of the year it is anticipated that investor confidence will continue to improve, bolstered by at least one further interest rate cut.
“There were a large number of assets sale-agreed at the end of the quarter which should translate into stronger levels of activity during the second half of the year. That said, it is unlikely that annual turnover will reach the long-term average this year.”
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