Value of commercial property purchases still lag behind 2023
The Largest Transaction Sale This Investor An The Year Corum Of Retail To Point Seen Mahon So Estimated French Park Retail The €50m Was Far For
The volume and value of commercial property transactions saw “significant increases” between April and June but total turnover for the year still lags behind what was recorded in 2023, a new report by estate agents Sherry FitzGerald has said.
During those three months, there were 34 commercial property transactions recorded worth a combined €523m. Spending during the first three months of the year hit an all-time low of €163m.
Total turnover for the first six months of the year stood at €686m, which is 32% lower than the same period last year and remains well below the long-term average of almost €1.6bn, showing the market is still at the “very early stages of recovery”.
According to the report, retail assets were the main driver of investor assets during the first half of the year, accounting for €212m of the total spend. The largest retail transaction was the acquisition of Mahon Point Retail Park in Cork by French investor Corum, from IPUT, for an estimated €50m.
Residential assets accounted for the second highest proportion of turnover, at €124m. The largest transaction of the quarter was the €70m sale of an apartment development in north Dublin.
The office market saw a considerable uplift in take-up activity during the three-month period but still only accounts for 14% of all the total turnover so far this year which is just over €96m.
“The vacancy rate in the Dublin market remains very high and is set to persist in the medium term given the strong level of development activity taking place at present,” the report said.
“However, the limited pipeline, and a focus on energy efficient accommodation, will help the absorption of this new space over the coming years.”
The healthcare sector accounted for a further 11% of capital spend, while industrial assets absorbed a further 7%.
The report also noted there was a shift in the size of transactions during the second quarter of the year. In particular, there was a “significant reduction” in the volume of smaller-sized transactions ranging between €1m and €10m in value, to 53%.
This is compared to 80% the previous quarter and is well below the long-term quarterly average of 63%.
The volume of transactions valued at €50m or greater stood at 9% in quarter two, following none in the previous three-month period. The volume of transactions valued between €10m and €20m increased significantly to 21%.
International investors were responsible for 57% of total market turnover in the six months to the end of June.
Of all total turnover, Dublin attracted 58% of the total spent during the first six months of the year, well below the long-term annual average of 83%.
The report said investor confidence had been “buoyed” by decreasing interest rates and a “more positive economic outlook is likely to lead to further market recovery going forward, although at a tentative pace”.
“This, coupled with a narrowing gap in vendor and purchaser pricing expectations, should help ensure a continued recovery in transaction activity during the remainder of the year, albeit at a tentative pace. Therefore, it is unlikely that annual turnover will reach the long-term average this year,” the report said.