Ireland's Commercial Real Estate Investment Hits 8-Year Low

BNP Paribas Real Estate reports Q1 spend at €161.7m, just 15% of 10-year average, signaling a significant drop in Ireland's commercial real estate market.

The commercial property market in Ireland has seen a significant decrease in investment spend, reaching its lowest level since the global financial crisis. According to the latest data from BNP Paribas Real Estate, only €161.7 million was invested in the market in the first quarter of this year, a stark contrast to the 10-year average of €1.0673 billion. This represents just 15 per cent of the average, with only 20 notable deals taking place compared to the usual 55 in the same period over the last decade. The average deal size has also dropped from €20.4 million to €8.1 million.

Despite the decline in investment, the current numbers still surpass the figures seen during the financial crisis in 2009 when only €137.47 million was invested in the entire year. The private rented sector (PRS) market has seen the most valuable deal so far in 2024, with TPG Angelo Gordon and Carysfort Capital selling 104 fully let apartments at the Shackleton Park scheme in Lucan, Co Dublin for about €42 million to German investor KGAL’s Core 5 Life fund.

The retail sector has been the most active area of the market, accounting for 42.7 per cent of the total investment value. The most valuable retail transaction in the first quarter was the €30 million sale of Gulliver’s Retail Park in Santry by the Cosgrave Property Group to a group of private investors. This was followed by French investor Iroko Zen’s €25 million purchase of Kilkenny Retail Park from Aviva’s Irish Commercial Property Fund.

On the other hand, investor interest in offices remains subdued, with the office sector accounting for only 7.8 per cent of the total investment. The most valuable office investment so far this year was the €4.4 million sale of Athlumney House in Navan, Co Meath to a private Irish investor. However, the outlook for office investment is expected to improve in the upcoming quarter with the anticipated completion of the €39 million sale of 40 Molesworth Street by State Street Global Advisors to German investor Deka Immobilien.

The industrial and logistics sector, although popular with investors, continues to face challenges due to a lack of available stock for sale. Only €8,731,800 worth of industrial and logistics assets changed hands in the first quarter, accounting for 5.4 per cent of the overall investment. The remaining 0.6 per cent of investment spend was attributed to properties outside of the main sectors.

While the commercial property market in Ireland has experienced a decline in investment spend, there are signs of potential recovery in certain sectors. The upcoming quarters will be crucial in determining the market's trajectory and investor sentiment.