Dublin bucks the downturn in the European commercial real estate market offers

  • Dublin bucks the downturn in the European commercial real estate market offers
    Independent.t. E.
    The rapid growth of private rented Dublin sector (PRS) has helped Ireland’s commercial real estate market in the tank, the slowdown of transactions recorded in Europe in the first half of this year.
    https://www.independent.ie/business/commercial-property/dublin-bucks-decline-in-european-commercial-property-market-deals-37175805.html
    https://www.independent.ie/business/article37175804.ece/386b5/AUTOCROP/h342/2018-08-02_bus_42951463_I1.JPG

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The rapid growth of private rented Dublin sector (PRS) has helped Ireland’s commercial real estate market in the tank, the slowdown of transactions recorded in Europe in the first half of this year.

This is according to the latest report of the European investment activities of the firm’s real estate data, capital Analytics (RCA).

Although the report shows transactions for a total amount of €109.8 billion were completed in the six months to the end of June across Europe, this represents a reduction of 19pc, recorded in the same period last year. High prices were among the factors that causes investors to reduce their direct property acquisition, RCA says.

According to his research, no sector escaped the downturn, which affected 14 out of the 20 most active European national markets. Sovereign wealth funds amounted to 0.2 PC of the total investment volume in Europe in the first half, compared with 4.5 PC share for the whole of 2017.

This negative trend, however, does not apply here, with RCA reporting that transaction volumes in the Irish market increased significantly in the first half compared with a year earlier, after a surge in buying rental homes in Dublin.

The largest of these PRS transactions AXA im real assets’ €161 million Grange and four acres of surrounding land development in Stillorgan, through the private sector rent (PRS) joint venture with Kennedy Wilson.

Other big PRS deals in the first half of this year included Irish life acquisition of 262 apartments from Park events in fernbank, Churchtown, Dublin 14 for €138.5 m; Carysfort Metropolitan Internet to purchase a 120-unit, six Hanover quay development of Cairns €101m and IRES Wright acquisition of the 128 apartments HAMPTON wood scheme in Finglas, Dublin 11 for 40 million euros.

The Netherlands, meanwhile, became the fourth most active market in Europe for six months to the end of June, according to RCA, with €9.8 billion of transactions, 17pc compared to the same period in 2017. The main driver of activity in the Dutch market sector residential lease.

This follows the rules introduced in July 2015, which oblige housing associations to focus on lower-income social housing, prompting their withdrawal from the free sector of the rental market. Housing shortage and a boom in the sale of housing has attracted investors to the sector.

Other European markets have entered in the Portuguese capital, Lisbon, which jumped to 13th place from 53rd in 2017 as a result of several large transactions, including blackstone portfolio sale of retail Park and two shopping centre Immochan totaling more than €400m.

The two most active markets in Europe, the UK and Germany recorded a decline in investments 11pc and 31pc respectively in the first half. Steam account for PC 48 total investment activity in Europe.

Commenting on the General characteristics of the European commercial real estate market, Mr. Leahy said: “this is the weakest level of investment by sovereign wealth funds since 2010, and they were not alone. Data from RCA for the first half show that most of the major sources of capital have been less active and USA with headquarters investors as a group were net sellers. Our indicators show that pricing in key markets of Western Europe are significantly higher than the previous peak reached in 2007.”

With research RCA that some €33 billion in transactions prior to the completion of the whole of Europe, the second largest influx of potential transactions he recorded, Mr. Leahy said he expects to improve the work of the European market.

He said, “We should see improvement in the second half of this year, although it is very unlikely that we will see a repeat of the record of the last quarter of last year.

“Real estate continues to attract generalist investors seeking income producing assets. Property is expensive in key markets in historical terms, however, so investors will have to focus on creating added value through asset management or target markets and sectors where rental growth prospects are good.”

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