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A TOTAL OF €1.37 billion has been spent on the Irish commercial property market in the first six months of the year, more than during the same period in 2006.
The total in 2006, just before the property bubble burst, was €1.09 billion, according to an analysis by property advisor CBRE.
The last six months has been marked by strong levels of interest from international real estate firms, eager to capitalise on the relatively low price of commercial real estate in Ireland.
Further to this, the emergence in 2014 of several Irish-based Real Estate Investment Trusts has added fuel to the fire, with Hibernia and Green REITs to the fore along with Canadian-backed IRES REIT, which recently bought the Marker Residences for €50 million.
In its bi-monthly research report, CBRE said that it is seeing “an extraordinarily strong volume of activity in the Irish commercial property market” and “there is nothing to suggest that the pace of activity will ease over the coming months”.
The sale of Nama property portfolios such as the Central Park complex in Leopardstown, which fetched over €300 million has been one of the main factors behind the sheer volume of transactions.
This shows no sign of slowing, with the state’s bad bank promising to bring at least €250 million of packaged property portfolios to the market every quarter as it races to wrap up while interest in Irish commercial property remains high.
Last month Nama brought a €160 million portfolio of Dublin apartments to the market.
Strong yields on office space, which had been declining but are now back on the way up, are also driving bids for well-located blocks.
CBRE found that yields across every property class are trending strongly, with a minimum of 4.75% on high street retail space climbing all the way to 8% for industrial property.
Savills director of international investment Domhnall O’Sullivan agreed with the forecaast offered by CBRE, estimating that there could be up to €5 billion in property sales completed by the end of the year.
He said that the interest is largely being driven by the speed of deleveraging by both Nama and foreign banks, many of whom are exiting the Irish market, and predicted that the current level of interest will continue for at least two years.
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