Prime Retail Yields Set To Tumble

09 Jul 2020 | 02.55 pm

Prime Retail Yields Set To Tumble

Insight from Cushman & Wakefield

09 Jul 2020 | 02.55 pm

Ireland’s commercial property market witnessed an acute slowdown in investment activity in Q2 2020 as a direct result of the Covid lockdown.

Cushman & Wakefield counted total investment turnover of c.€380m across 16 deals in the three-month period from April to June end. At the midpoint juncture of the year, investment into Irish commercial property stood at €900m across 54 deals.

Kevin Donohue (pictured), C&W’s head of Capital Markets Ireland, commented: “A number of larger transactions were agreed prior to lockdown. The fact that these deals still completed during the quarter shows that investor confidence in the Irish investment market remains resilient.

“We expect a similar outturn for quarter three due to continuing overseas travel restrictions, though we anticipate the market rebounding strongly in quarter four and into 2021.”

Volumes recorded in Q2 reflect a significant decrease on the €1.1bn achieved over the identical period in 2019. However, Q2 2019 was largely bolstered by four transactions sold in excess of €100m, and the aggregate value of these four sales was €780m.

The largest transaction in Q2 was the acquisition by GLL Real Estate Partners of Bishop’s Square, D2. The affiliate of the Australian investment bank Macquarie Group and Patrizia AG, GLL Real Estate Partners purchased the office block for €183m.

Also in Q2, Riverside One, Sir John Rogerson’s Quay, was purchased by investment manager IPUT for c. €37m.

Cushman & Wakefield’s yield outlook for the Dublin investment market in 2020 projects a minor outward movement of prime office yields, while a slight inward adjustment is reported for the logistics market. A more pronounced adjustment is projected for prime retail yields, similar to trends across other European markets.

Green Acres

In the residential sector, the view from Sherry FitzGerald is that the pandemic has changed many aspects of people’s lives and buyer behaviour is adapting accordingly.

Recent research by the estate agent found that access to reliable broadband is the top-ranking feature for purchasers, followed by more outdoor space and a good energy rating. Other important features are space for a home office and access to public parks.

Michael Grehan (pictured above), chairman of Sherry FitzGerald’s residential arm, stated: “A third of our city centre instructions in the last month are from people moving out of the centre of Dublin in search of more space for their families. Those with mortgage approvals are very decisive and want to buy.

“We are coming across plenty of viewers whose employers do not envisage them returning to an office five days a week, for the foreseeable future. There will undoubtedly be a change in housing demand patterns, and it will be interesting to see how the new hybrid of office/remote working evolves in the longer term.

“People love the variety of services and amenities available in Dublin, but they also love the relationship with nature that is so rare in a crowded world. Currently, one in four of our sales in regional Ireland are to people moving from cities, both within Ireland and from abroad.”

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