Record year for investment in Irish commercial property

Investment in Irish commercial property reached a record high in 2014, with some €4.5 billion invested. This represents a 25 per cent increase on the previous peak of €3.6 billion reached in 2006.

Investors rushed to avail of the capital gains tax (CGT) exemption in the last quarter, with some €1.6 billion invested in the three months to December, making Q4 the strongest quarter of the year.

In total, there were 295 transactions in 2014, compared to 145 in 2013 and 121 in 2006, and there were 15 transactions greater than € 100m in 2014 compared to three in 2013.

The largest transaction of the year was Project Sapphire which Cosgraves sold to Green REIT for €375m in Q2. It comprised two office blocks: George’s Quay and George’s Court, and retail: Westend Retail Park.

Hannah Dwyer, head of research at JLL Dublin said that 2014 was “ a very active year for the property market”.

“The turn-around for investments has been remarkable, with an uplift in the supply of assets coming onto the market, strong demand from investors, and increases in values and returns. Essentially we have seen a pent-up surge of workout activity with willing sellers and buyers in the market,” she said.

However, while 2015 is likely to be “another strong year” for the Irish investment market, Ms Dwyer noted that activity levels will unlikely to match 2014.

“We do not expect activity to be at the same record-levels we saw in 2014, but investment volumes are likely to achieve € 3bn. This is still significantly ahead of the 10-year average of € 1.4bn,” she said, noting that there remains a significant volume of assets still to be brought to the market from banks deleveraging.