Investors plunged up to €760 million into Irish commerical property in the first three months of the year, new reports show.
Sales of student accommodation blocks, apartments and warehouses contribute to a strong quarter for commercial real estate.
Jones Lang Lasalle (JLL) calculates that buyers did €760 million worth of deals in the three months to the end of March, while CBRE Ireland puts the total at €750 million.
Bain Capital’s sale of three student accommodation blocks in Dublin and Galway to fellow US investor, New York-based Ares Capital, for €145 million, was the single biggest transaction over the period.
The blocks, in Blackhall Place and Cork Street in Dublin, and Fairgreen in Galway, will house 576 students in purpose-built accommodation.
According to JLL, residential property, that is apartments and student dwellings, accounted around €377 million of the total, or almost 50 per cent, during the quarter.
CBRE says the high number of overseas students coming to study in the Republic is drawing investors back to a sector that was thought to be in trouble as Covid closed colleges two years ago.
JLL noted that industrial deals continued on an “upward trajectory” begun last year, accounting for €184 million, or one quarter, of the total.
That figure made it the strongest first quarter on record for the sector, JLL said.
The firm was joint agent with Savill’s on the biggest transaction in that division of the market, a proposed €128 million warehouse pre-let as a distribution centre to Penney’s owner, Primark.
New buildings
John Moran, chief executive, JLL Ireland, predicted that the supply of new industrial buildings would be unlikely to meet demand.
“This is being compounded by the rising costs of construction and labour, which will continue to drive rents up in both prime and secondary locations,” he said.
Colin Richardson, associate research director, CBRE, said 2021's positive momentum had carred on into the first quarter of this year.
“The demand for opportunities remains strong, particularly in the current inflationary environment,” he added.
Meanwhile, Knight Frank calculated that 75 per cent of the offices due to be built in Dublin this year were already let.
Strong demand is pushing up rent, which now stands at €65 a sq ft in the capital, according to Joan Henry, the firm's chief economist.
“We forecast that total take-up in 2022 will reach between two million and 2.5 million sq ft, taking it back close to the long-term average,” she said.
