The CBRE Group published their Ireland Market Outlook 2022 earlier this year. CBRE is one of the world’s largest commercial real estate services and investment firms, with 2020 revenues of $23.8 billion. It’s interesting to keep an eye out to see how the property sector aligns with the overview as the months pass by.
Key takeaways from the report:
– Continued momentum in transactional activity in all of Ireland’s property sectors again in 2022
– A key theme for 2022 will be increased focus on sustainability
– The issues of viability and affordability expected to remain central themes this year
– Office occupiers beginning to explore growth and expansion opportunities again
– 2022 will see greater divergence in performance & pricing between prime and secondary assets
– Expect to see a notable increase in speculative development of industrial and logistics accommodation
– Stronger occupier and investor interest in secondary cities over the course of the next 12 months
– Good visibility on likely trades in the hotel sector during 2022
Extract
CBRE’s expanded view is that despite the disruption of Covid-19, real estate demonstrated remarkable resilience as an asset class and professional services sector. MD Myles Clarke comments: “We experienced a dramatic rebound in activity levels in 2021 driven by the robust economic performance of the Irish economy and continued search for yield by the international investment community.”
“Government bond yields remain low while equity markets continue to rally providing a supportive background for institutional demand to allocate in favour of commercial real estate. We expect financial conditions will support ever lower yields as the assets concerned still offer returns superior to the geographic centres from where the capital originates.”
Investment commentary
“The Irish investment market performed better than expected in 2021 both from a return and a liquidity perspective. Considering the length and severity of lockdowns experienced in Ireland relative to peers and the inability of investors to travel to inspect opportunities for a large part of the year, it is remarkable that investment spend reached €5.5 billion.
“The composition of spend was somewhat different in 2021, however. Residential accounted for more than 40% of total investment spend in the year while record volumes of capital were deployed into the industrial and logistics sector. Indeed, the industrial sector was clearly the star performer of the Irish commercial property market last year, mirroring trends experienced in many other European jurisdictions. Core offices made up a sizeable proportion of investment activity during the year while we also saw the first signs of a resumption in liquidity for well-priced retail assets and some hotel investment opportunities changing hands.”
“Investment volumes this year are likely to be broadly similar again, with Q1 helped to some degree by a carryover of transactions that hadn’t signed by December 31st. There is plenty of European capital targeting opportunities and several new entrants considering investing in the Irish market, attracted by liquidity levels, underlying occupational fundamentals and strong economic and demographic drivers.”
“We don’t expect to see a major change in the types of buyers who will be active in the Irish market this year albeit sectoral allocations may change, particularly if the Central Bank’s proposed changes on leverage limits for certain categories of funds are imposed. Continued intervention in the residential sector of the market could also see some investors switching to alternative sectors over the course of the next 12 months.”
“We expect to see continued appetite for industrial and logistics investment opportunities in 2022 albeit this will again be compromised by a scarcity of stock. Meanwhile, we are likely to see retail accounting for a much larger proportion of investment sales activity this year.
Download the full Outlook report here.