Dublin Office Market Q2 2019 : Despite a quiet second quarter, the first-half of the year sees the strongest-ever level of take-up.
- Macro weaknesses in the Eurozone economy increase the likelihood of further monetary stimulus.
- Dublin is expected to be the fastest growing capital city in Europe
between 2020-2035, with it’s population predicted to rise by 18%.
- 355,000 sq ft transacted in Q2 to bring take-up at the half-way point of the year to 1.7 million sq ft.
- €257.1 million worth of office investment transactions changed
hands in Dublin during Q2. A number of large sales are expected to boost volumes in the second half of the year.
- Our analysis of investment flows since 2013 shows the ownership structure of the Dublin office market to be globally diversified.
Economy: Industrial production in the Eurozone beat expectations in May, increasing by 0.9% on the previous month according to Eurostat. It was not, however, enough to drag the index into positive territory on an annual basis, with a contraction of 0.5% recorded compared to May 2018.
While production in Ireland increased by 8.2% annually, Germany saw a 4.3% contraction as global trade uncertainty hit output with other large European economies also facing headwinds. Inflation also remains weak, standing at 1.3% at the end of Q2, well below the ECB’s target of close to, but under, 2%.
This softness in the economy means that accommodative monetary policy measures will likely be re-introduced in Q3 in the form of interest rate cuts and quantitative easing. This will place further downward pressure on sovereign debt yields – Ireland’s are already close to zero – and increase the relative attractiveness
of risk assets such as Dublin office investments which currently trade at a risk premia of 4.0%.