Almost €800m (£685m) was invested in the Irish property market in Q3 2021, some 25% higher than a typical third quarter over the long-term average, according to new figures from Savills.
Total year-to-date investment volumes in Irish real estate are now €3.5bn, representing the highest volume for the period on record and double the volume seen in the first three quarters of 2020.
Brendan Delaney, divisional director of investments at Savills, said: “Conditions in the investment market seem to have returned to relative normalcy as restrictions have been reduced throughout the year. 2020 was defined by two lost quarters with travel restrictions hampering the ability of foreign investors to physically come to Ireland, while in-person viewings also faced serious disruption throughout the year. We are now seeing a resumption of the strong levels of activity present before the pandemic with several large deals that are close to signing set to drive a strong Q4.”
The firm expects year-end totals of between €4.7bn and €5.2bn, the second strongest year this cycle.
The hottest sector for investment in the Irish market continues to be the multi-family sector, said Savills with €414m of multi-family assets traded during Q3. This accounted for just over half of all investment in the quarter. Year-to-date, some €1.9bn of multi-family assets have traded in Ireland, giving the sector a 54% market share.
“The sector has accounted for a growing share of the investment market in recent years, driven by strong growth in the PRS market and has been resilient to the pandemic to the point of benefitting from it, due to its growing perception as a defensive asset class,” said Delaney. “Once again, the private rented sector continues to play a vital role in unlocking new supply, which is evident by the majority of residential units being forward purchased. This is providing a healthy investment base by giving certainty for developers, without this, it is highly unlikely that current levels of construction would be happening.”
While residential leads, retail is slowly rebounding. Savills’ figures show €107m of transactions during the quarter, representing 14% of the total volume of assets traded. This is the first time since Q1 2019 that the sector has accounted for more than 10% of total volumes, said Savills.
Trading figures for office stock was less impressive, with just €140m of investment.
“We expect this to change approaching year end as the sector begins to recover from the impact of the pandemic, with office developments reaching completion and lease-up being achieved we will see a pick-up in investment volumes in the sector,” said Delaney. “We see opportunities arising for investors on some ‘mega deals’ and select newer stock with ESG credentials coming to the market which will demonstrate more competitive pricing. While PRS retained its relatively large share of the market this quarter we would expect it to ebb in the final quarter as with a broad spectrum of assets set to transact in the final quarter of the year.”
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