Investment turnover in Ireland has reached €1.09 billion after the first three quarters of 2013, according to Savills data, demonstrating the continued momentum seen in the first half of 2013. The international real estate advisor records turnover for Q313 at approximately €480 million from 22 investment property sales. This compares with a transaction volume of approximately €110 million for Q3 in 2012, underlining the increased activity and confidence in the Irish investment market.
The top deals completed in Q3 include the purchase of the Opera Portfolio by Kennedy Wilson for €306m, consisting of 14 properties located across Ireland. These include 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. Further significant transactions include 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. €43 million.
The firm’s research shows that Irish and American buyers continue to dominate the market, respectively accounting for approximately €350m (32%) and €485m (45%) of total 2013 turnover to date. Larger lot sizes that have come to the market so far this year have attracted interest from both institutional and private equity investors. Six transactions in the €50m plus lot size category have been recorded by the firm so far in 2013, making up 57% of turnover. Of these three were purchased by US investors, two by Irish institutional investors and the other by a private Irish investor, according to Savills data. Eight investments were completed in the €20m to €50m category comprising 22% of total market turnover. Of the remaining transactions, seven involved lots of between €10 to €20m, while 11 deals were for lot sizes between €5m and €10m.
Fergus O’Farrell, investment director at Savills Ireland, comments: “The attractiveness of Ireland as an investment location for domestic and international core and opportunistic buyers continues to grow, 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’s purchase of the Opera portfolio for €306m is the first deal of this scale in the current cycle, and this 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 are seeing 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.”
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. The firm has noted an increasing demand for apartment block sales. So far in 2013 multi-family deals have amounted to a total of €225 million, including the sale by Savills of four Dublin multi-family assets for approximately €43 million.
Fergus O’Farrell adds: “Our outlook for the remainder of the year remains extremely positive with approximately €550 million of stock currently available on Ireland’s investment market. We expect to see €600 million of property come on the market before year end so that turnover may well exceed €1.5 billion in 2013, a level which has not been reached since the highs of 2007.”