Ireland’s investment market weathers economic uncertainty with €760m transacted in Q1 2022

Latest research from JLL, tracking Ireland’s investment market transactions, indicates that €760m worth of investments were traded in Q1 2022.

Market activity continues to operate with healthy levels of transactions on the back of the third-largest quarter on record in Q4 2021. Despite the volatile geopolitical landscape, which has the potential to negatively impact all facets of the economy, investor sentiment remains strong and the headwinds to the economy have not stalled any reported investments throughout the real estate market. The market is expected to gain further momentum in Q2/Q3 2022 with €1.2bn of investments under offer and an additional €1.5bn worth of assets expected to be brought to the market in the near future.

The residential sector remains the dominant sector with 50% of volumes, retaining its market share from 2021. The industrial sector continues its upward trajectory from 2021 and volumes in the sector represent 25% of the market. This was the largest first quarter on record for the sector with €184m worth of investments. Offices comprised 21% of the market and retail with 3%, the remaining share comprised of small scale mixed-use investments.

Retail is expected to take a larger share of the market towards the latter half of the year with a renewed interest from investors in retail parks and shopping centres. In Q1 2022, 2 shopping centres transacted and the asset class will continue to appeal to investors who are wishing to capitalise on a sector emerging from the pandemic.

Transaction volumes were largely led by Industrial and PRS investments. The largest deals included: 1) Project Ruby, a portfolio of student accommodation based in Dublin and Galway was the largest investment of the sector transacting at €145m; 2) A pre-let Distribution Centre by Primark, in Newbridge, Co. Kildare for €128m which JLL acted as the sales agent with Savills; and, 3) A confidential PRS scheme for €85m.

John Moran CEO and Head of Capital Markets at JLL Ireland said that: “Pipeline supply remains a prominent issue for the industrial sector and it is unlikely to meet demand in the near future. This is being compounded by the rising costs of construction and labour, which will continue to drive rents up in both prime and secondary locations. Occupiers, especially in e-commerce, are scrambling to find suitable locations to meet consumer needs and space is scarce for large fulfilment centres, parcel hubs, online grocery fulfilment, and dark kitchens.

“Any existing stock on the market will remain an attractive prospect for investors. We expect rising construction costs to also impact pipeline supply in the PRS and Office markets which could lead to a scarcity of opportunities in the medium term.

“Despite the global economic challenges, the fundamentals that make Ireland an attractive country to invest in remain unchanged and the markets are expected to remain stable throughout the current uncertainty, albeit at a lower level than the exceptional highs of 2021.”