Irish investors spent €12 billion on commercial property assets in Ireland and Europe during 2007, according to new figures due to be released at a European investment conference in Dublin tomorrow.
Only €2 billion went into the Irish market because of a scarcity of investment opportunities while €5.3 billion was spent in mainland Europe and €4.7 billion was invested in the UK.
The overall spend in the UK is higher than originally estimated but is down on the 2006 figure of €5.5 billion.
The latest research by CB Richard Ellis shows that 53 per cent of Irish investment in the UK last year came from private individuals while 25 per cent was spent by property companies and only 6 per cent came from financial institutions and pension funds.
The confirmation that the private investors are the single biggest players in the UK market will not come as a surprise given the shift in wealth over the past decade to business and professional people who, with the support of the main Irish banks, have been able to gear up to buy investments which previously would have been outside their reach.
These investors have done exceptionally well from buoyant property markets in the UK and Ireland and, though values in both countries have slipped somewhat in recent months, few (if any) are under pressure to sell.
Not surprisingly, the bulk of the assets acquired by Irish investors in the UK last year comprised office properties. Around 63 per cent of the funds went into offices compared to 25 per cent in retail and 4 per cent in the industrial sector.
Another sign of the spending power by the private sector was the finding that about half of the overall amount invested in 2007 went into central London where prices are generally highest. Liverpool was the next favoured location, attracting 9.1 per cent of the funds as against 6.4 per cent in Manchester.
Despite the close proximity to the Belfast market, only 5 per cent of the funds were invested there, due in part to a traditional hostility by some Northern Ireland estate agents to investors from the other side of the Border and an equal reluctance by Dublin investors to put money into Belfast when they can find a suitable investment opportunity in London.
Andrew Gunne of CBRE says there are not a lot of forced sellers so far in the central London market but they are seeing good value relative to pricing in recent years "which one could argue gives a very compelling reason to buy back into the most liquid and landlord-friendly market in Europe".
In the medium term, he said the focus seemed to be on key pockets in central London where there were very strong underlying occupational markets, particularly in the micro markets with very little supply in the pipeline over the next two years and low overall vacancy rates.
He said investors should be reminded that this was only the third time in 21 years that prime city yields are above the five-year UK base rate of 5.2 per cent.
Despite the perception of better value now being available, the flow of Irish funds into the UK market has slowed considerably in the first two months of this year because debt financing is not as readily available as in the past.
Even wealthy investors now have to settle for 70 to 75 per cent loan-to-value because of the ongoing currency crisis.
