Yesterday, property services powerhouse CBRE published a statement on the Irish investment property market. The “investment property market” comprises both residential and commercial investment and is a little bit artificial, for example the €100m Google purchase of Montevetro in 2011 is not regarded as an investment because Google is occupying the property. The Kennedy Wilson purchase of the iconic Allianz building in the Gasworks in Dublin – that’s the donut shaped block of apartments which was constructed in the former gasworks – is part of the “investment property market” even though it relates to residential property, but CBRE exclude smaller buy to let investments. So, it is an artificial measure but tries to convey the state of the property market and the attitude of investors, and for that, it is useful.
CBRE says that the Irish “investment property market” was worth €275m in the first three months of 2012, and that compares with a market worth €545m in all of 2012. There would appear to be a little slippage with figures here, with previous estimates for 2012 being in the €700m range, it seems some sales which were expected to close in 2012 actually slipped into 2013. The peak in 2006 saw €3bn of investment property transactions, so we’re way off those heady days, but we are up on the circa €50m in 2009. In December 2011, Minister for Finance unleashed a giveaway budget for Irish commercial property with stamp duty slashed from 6% to 2%, capital gains tax incentives and the abandonment of the Government commitment to abolish Upward Only Rent Review clauses in pre-February 2010 commercial leases.
We already know from the Jan/Feb 2013 bi-monthly CBRE report what the main investment sales have been this year, but to recap, they’re Bishops Square just off St Stephens Green sold for €65m to US investor King Street, and the sale to German fund GLL of two adjoining buildings on Grafton Street for a reported €40 million, the sale of St. Martin’s House in Baggot Street, Dublin 2 to German investors for a reported €22.5 million, the sale to an overseas investor of the SAP office building in Citywest for €14 million, the sale of an office building on Burlington Road, Dublin 4 for €13.1 million and the sale of a 62 apartment development off the North Circular Road in Dublin 7 for €9.6 million to an Israeli investor.
So the 2013 figure of €275m is very good news indeed, the downgrade of 2012 to €545m is less good news though it’s still way above the 2009 low of €50m. CBRE was its habitual chipper self in the last bi-monthly report and there is no doubt that there is substantial investor interest in Ireland at present, the question is whether that will translate to completed sales.