Investment property turnover reaches €1.09 billion for 2013

Investment property turnover has now reached €1.09 billion after the first 3 quarters of 2013. This is according to the latest research from Savills Ireland which shows that turnover for Q3 2013 was approximately €480 million from 22 investment property sales. This compares with a turnover of approx.€110 million for Q3 in 2012 – showing a significant increase and underlining the increased activity and confidence in the Irish Investment Market. 

Fergus O’Farrell, Director of Investments at Savills commented “The attractiveness of Ireland as an investment location for domestic and international Core and Opportunistic buyers continues to improve, on the back of improving economic data and Ireland’s impending exit from the Bailout program at the end of this year.

In addition, we are now seeing scale returning to the market, with significant demand for lot sizes from €100m to €400m. Kennedy Wilson bought the Opera portfolio, the first deal of this scale in the current cycle for €306m, which was competitively bid. Several other portfolios of scale are on the market or coming to the market in the short to medium term and are keenly anticipated by investors.

We see a trend where investors are increasingly looking to deploy large equity cheques. This is driving competitive bidding for large scale assets and portfolios leading to premium prices being achieved.”

The top deals completed in Q3 included the purchase of the Opera Portfolio by Kennedy Wilson for €306m, which consisted of 14 properties located across Ireland including Stillorgan Shopping Centre, Merchant’s Quay Shopping Centre in Cork, KPMG’s Dublin office on Stephen’s Green and the Bank of Ireland headquarters on Mespil Road ; the sale of New Century House in the IFSC for a price in the region of €28 million; the sale of 87-89 Pembroke Road Ballsbridge to Irish Life, for €15.5 million and the sale to CAPREIT of four Dublin multi-family assets for a combined price of approx €43m. Irish and American buyers continue to dominate accounting for approximately €350m (32%) and €485m (45%) respectively of total turnover to date.

Savills say, in terms of asset classes, the majority of demand is for offices, with 31% of turnover in the first three quarters of the year in this sector. Investors are chasing well located third generation offices, where it is expected prime rents will increase in the next few years due to a shortage of new office developments in the planning pipeline. There is increasing demand for apartment block sales. Multi-family deals completed to date, which included the sale by Savills of four Dublin multi-family assets for approximately €43 million amounted to a total of €225 million to date this year.

Larger lot sizes, which came to the market so far this year have attracted the interest of both institutional and private equity investors. There were six transactions in the €50m plus lot size category, making up 57% of turnover. Three of these were purchased by US investors, two by Irish institutional investors and the other by a private Irish investor.

Eight investments were completed in the €20-€50m category comprising 22% of total market turnover. Of the remaining transactions, seven involved lots of between €10-€20m, while 11 deals were for lot of between €5-€10m.

Fergus concluded, “The outlook for the remainder of the year remains extremely positive with approximately €550 million of investment property currently available. We foresee an additional €600 million of property coming to the market before year end which bodes well for turnover exceeding €1.5 billion for the year, a level which has not been reached since the highs of 2007”.