€286 million invested in the Irish commercial property market in Q2 2017 as the normalisation of activity levels continues

05 July 2017

The normalisation of activity levels in the Irish Investment market that became apparent in Q1 has continued into Q2, with approximately €286 million worth of investment transactions changing hands. The Dalata Group’s purchase of the Clayton Hotel on Cardiff Lane for a figure believed to be in the region of €40 million represented the largest transaction of the quarter. The total transaction spend for the first half of the year now stands at €761 million, which is significantly behind the €2.8 billion that traded during the same period last year when the sales of One Spencer Dock as well as the Blanchardstown and Whitewater Shopping Centres transacted.

While investor demand remains high, the market is being held back by a lack of product coming to the market for sale. This is particularly true of core office opportunities, which has encouraged investors to consider suburban and regional assets. Indeed two of the largest office transactions of the quarter were situated in the suburban locations of Dublin 18. These were the sale of the Park Collection, which consisted of four office blocks, for €38.6 million at a net initial yield of 6.82% and the former Microsoft offices at Building 2, South County Gateway which was sold for €20.5 million and equated to a yield of 9.20%. Global investor AEW gained a foothold in the Dublin property market in Q2, through the purchase of 42-43 Henry Street for €20.5 million, in what was also the largest retail transaction of the quarter. Investors are increasingly being drawn to the retail market and indeed the industrial market owing to the strong rental growth and returns that these sectors now offer. With regard to the industrial market, this point was underscored by the purchase of Unit 21 at the Fonthill Industrial Park by SSGA for €11.05 million at a net initial yield of 4.33% in what represented a significant sale for the sector.