Sharp drop in foreign investment in Irish property
Properties Picture: Of Shops, Us Warehouses, €8 2013 Rent And Earning Between Offices, Other 2022 Apartments, Istock 7bn Investors And Purchased
The current rising interest-rate environment has forced a reassessment of Irish property values, causing international buyers to pause their purchasing activity.
A new report by property consultants BNP Paribas Real Estate shows €625m of corporate property investment took place in the first quarter of this year, a drop of 18% on the same period last year.
International investors have crowded-out domestic buyers of income-producing property over the last decade, with the local share of turnover falling from 55% in 2014 to under 14% last year.
However, the report shows a sharp fall off this year. US investors deployed €14.75m of capital in the first quarter, down from a 10-year quarterly average of €213m.
US investors purchased €8.7bn of offices, shops, warehouses, apartments, and other rent-earning properties between 2013 and 2022.
Germans have been the second biggest foreign buyers, spending over €6bn in the last decade. However, there were no German purchases in the first quarter, the first time that this has happened since 2017.
BNP Paribas Real Estate's director of research John McCartney said:
As rates increase, fixed-income investments become relatively more attractive and there is less debt capital for property deals. This reduces the amount that investors are willing to pay for a given stream of rental income.
It means slowing rental growth and rising interest rates mean investment property values are now adjusting down. However, Ireland's demographic profile means the country remains an attractive place for property investment.
"International investors remain confident in Ireland as an investment location, particularly because our demographic profile underpins strong demand for residential, logistics, and certain forms of convenience retail property, including grocery stores and retail parks," McCartney said.