US investors were the most active in the Irish commercial property market last year as €5.5bn in assets changed hands, according to a report from BNP Paribas Real Estate.
Americans bought €1.34bn worth of office space, warehouses and rental apartments and offloaded €720m worth of property, but over the past five years US investors have been net sellers, divesting €239m more than they have bought.
By comparison, German investors have been the biggest backers of Irish commercial property, net spending €3.8bn since 2017, with blue-chip investors such as Real IS, Deka Immobilien, Patrizia, Union Investment and DWS leading the way and encouraging "significant inflows" from French, Dutch and Swiss investors.
Residential property attracted the most investment in 2021, the market's second-strongest year on record, at €2.27bn while just under €1bn was invested in "logistics property" including warehouses.
"No matter what happens in the economy, people still need to consume goods, which in turn, need to be warehoused," report author John McCartney, director of research at BNP Paribas Real Estate, said.
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"Likewise, through the ebbs and flows of economic cycles, people still need places to live," he added."
The report forecasts another busy year for commercial property with €1.5bn worth of assets currently on the market and "a strong pipeline of office and apartment development" providing purchase opportunities, although McCartney highlighted a shift in investment patterns.
"Risk-embracing US private equity funds were first on the scene after Ireland’s economic crisis, and were able to pick-up distressed assets, including office blocks, apartments, and retail properties, at heavily discounted prices," he said.
"As the Irish economy stabilised, recovered and then begun to outperform, a different breed of institutional investors was attracted to Ireland. These buyers, including pension funds and [real estate investment trusts], have lower costs of capital, are able to pay higher prices for stable rental income, and are here for the long-haul.”
BNP Paribas figures show Irish investors net divested €7.8bn worth of property from 2017 to 2021, buying €5.3bn and selling €13.2bn, while British buyers were net investors (€1.8bn), buying nearly €3bn and selling €1.1bn worth of real estate.
The market was worth a total of €22.2bn over the five-year span, with French (€626.4m), Singaporean (€671.3m), South Korean (€512.5m), Dutch (€250.5m), Swiss (€192.5m), Cypriot (€273.4m) and Hong Kong (€175m) investors also chipping in.
Commercial property accounted for the vast majority of the market's value, with residential housing making up €7.1bn worth of transactions, with Irish investors net selling €2.8bn and German investors buying homes worth a total of €1.2bn.
(Pic: Getty Images)
