REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
CB RE RESEARCH

 2018 IRELAND
R E A L E S TAT E
   MARKET
  OUTLOOK
REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
This year’s edition of Outlook is dedicated to the memory of our dear colleague Steven Brett, who tragically passed away during
2017 and is sadly missed.
REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
SUMMARY

    PAG E 0 6
    Review of 2017 - Enda Luddy

    2017 was a very active year for the Irish commercial real estate sector although returns and
    transaction volumes returned to more normalised levels following three years of
    out-performance. The occupier markets continued at pace with the office sector being the star
    performer.

                             PAG E 0 8
                             Market Outlook 2018 - Marie Hunt

                             The Irish CRE market is now approaching late cycle in many respects. However, occupier activity
                             remains robust, development is controlled, the market is priced attractively compared to the rest
                             of Europe and there are still considerable opportunities for both occupiers and investors alike.

      PAG E 1 2                                                            PAGE 14
      Funding Outlook 2018 -                                               Offices
      Patrick Phelan
                                                                           Considerable expansion activity is expected to
      There has been a notable improvement in the                          support another strong year of take-up in the
      availability of bank funding for good                                Dublin office market in 2018 following a record
      income-producing commercial and residential                          performance last year, which was boosted by a
      real estate. In addition, several new sources of                     number of Brexit-related moves. There is
      alternative funding have emerged, with non-Irish                     potential for further rental growth in many parts
      banks, insurance companies and non-bank                              of the market including secondary and provincial
      alternative funders all looking to grow their share                  properties in particular.
      of the Irish lending market.

© 2018 CBRE U.C.                               IRELAND REAL ESTATE MARKET OUTLOOK 2018                                CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
SUMMARY

    PAG E 1 9
    Retail

    With retailers increasingly focussing attention on a
    relatively small pool of core locations and schemes, we
    expect to see rental growth in the most sought-after
    streets and schemes but rents remaining relatively flat
    elsewhere during 2018 as the sector reacts to structural
    changes.

    PAG E 2 2                                                            PAGE 26
                                                                         Investment
    Industrial & Logistics
                                                                         We expect to see continued appetite for prime
    The industrial & logistics sector will firmly move into
                                                                         investment opportunities in the Irish market in 2018
    the development phase of the cycle during 2018 with
                                                                         with investors increasingly focused on good
    new industrial and logistics facilities due to be
                                                                         income-generating opportunities in the office,
    delivered and a corresponding uplift in transactional
                                                                         industrial & logistics and residential sectors in
    activity anticipated.
                                                                         particular. We expect to see some further new
                                                                         entrants to the Irish investment market this year.

      PAG E 3 0
      Development

      With a clear need to release more land for sale, now is the optimum time for landowners to bring sites to the market
      and capitalise on the depth of demand that prevails for well-located zoned and serviced sites.

© 2018 CBRE U.C.                               IRELAND REAL ESTATE MARKET OUTLOOK 2018                                 CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
SUMMARY

      PAG E 3 3
      Hotels

      Unlike 2017, we expect to see some Dublin hotels
      coming to the market during the next 12 months. If
      this materialises, we could see up to €500 million of
      Irish hotels changing hands in 2018, with a sizeable
      proportion of these transactions occurring off-market.

      PAG E 3 6                                                         PAGE 39
                                                                        Cork
      Dublin Pubs
                                                                        With room for some further yield compression and
      After a year in which transactional activity was
                                                                        above average rental growth, we expect to see strong
      disappointingly low, we believe we will see an
                                                                        appetite for prime opportunities that come to the
      escalation in the number of Dublin pubs offered
                                                                        market in Cork during 2018. We expect to see
      for sale over the course of the next 12 months,
                                                                        increased evidence of development activity across a
      which is good news for the many specialist
                                                                        range of sectors in the Cork market over the next 12
      operators seeking to secure new premises in the
                                                                        months.
      capital.

      PAG E 4 2
      Contacts

© 2018 CBRE U.C.                              IRELAND REAL ESTATE MARKET OUTLOOK 2018                               CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
REVIEW OF 2017

  CONTINUED STRONG INVESTOR DEMAND
  F O R I R I S H R E A L E S TAT E W I T H M A N Y N E W
                         ENTRANTS

                    2017 was a very positive year for economic growth across most of Europe with Ireland
                    outperforming other European countries for the fourth consecutive year. 2017 also
                    proved to be extremely busy in most sectors of the Irish commercial property market.

With deleveraging from NAMA and various banks virtually                  “We continued to witness strong investor
completed and few portfolio sales materialising, sourcing
product proved challenging in 2017. As a result, overall
                                                                         demand for Irish real estate with many
transaction volumes in many sectors of the market, including             new entrants emerging throughout the
investment and hotels, were down compared to the bumper                  last 12-month period”
performance of 2014-2016. Although sourcing product proved
challenging, we continued to witness strong investor demand
                                                                         Looking at the volume of leasing and sales activity in the
for Irish real estate with many new entrants emerging
                                                                         industrial and logistics sector during 2017 would lead one to
throughout the last 12-month period.
                                                                         believe that demand was weaker than it was. However, take-up
                                                                         figures mask the underlying scarcity of modern industrial &
The occupier markets were extremely busy in 2017 with the
                                                                         logistics buildings along prime road corridors, which continued
Dublin office market being the exemplar performer, generating
                                                                         to frustrate would-be occupiers. As a result, prime rental values
a record volume of leasing activity, fuelled by the signing of
                                                                         in the industrial sector increased by more than 6% year-on-year
several large transactions including some notable pre-lettings
                                                                         to reach a level that justifies new development. Indeed, there
during the year. The bulk of leasing activity in the office market
                                                                         was a notable increase in planning applications for new
in the capital emanated from the expansion and relocation of
                                                                         industrial & logistics buildings during the last 12-month period,
existing occupiers with Brexit providing a welcome additional
                                                                         which will see much needed new development kick-starting in
layer of demand during the year. Indeed, the volume of leasing
                                                                         this sector in 2018.
activity accounted for by UK occupiers more than doubled
year-on-year. Prime headline rents in the office sector in the
                                                                         Consumer spending & retail sales activity remained strong
capital have now reached €700 per square metre (€65 per sq. ft.),
                                                                         against a healthy economic backdrop during 2017. However,
having increased by 4% during 2017, although the bulk of
                                                                         concerns about the ever-increasing move to online platforms
transactions are being concluded at somewhat lower levels.
                                                                         and leakage to Northern Ireland as a result of the Sterling Euro
There was much discussion during the last year about the
                                                                         exchange rate proved a lingering concern for some investors in
volume of new office stock being developed in the capital
                                                                         the retail sector of the economy in 2017. As a result, many
considering the number of cranes visible on the horizon but the
                                                                         investors and indeed occupiers focussed their attention on a
reality is that vast majority of office stock delivered to the
                                                                         smaller number of the better performing high streets, shopping
market in 2017 was fully accounted for by year-end, which
                                                                         centres and retail parks.
demonstrates the extent to which the supply line is controlled in
this cycle.
                                                                         In the investment sector, transactional activity in 2017 was
                                                                         approximately 40% less than the volume traded in 2016 (when
“There was a notable increase in
                                                                         several large shopping centre sales skewed transaction
planning applications for new industrial                                 volumes). While office and retail assets again made up the bulk
& logistics buildings during 2017”                                       of activity, there was a notable increase in the volume of hotels
                                                                         being sold as investments during 2017. There was also a pick-up
                                                                         in industrial investment activity and a notable increase in
                                                                         residential properties being sold for investment purposes with

© 2018 CBRE U.C.                                  IRELAND REAL ESTATE MARKET OUTLOOK 2018                                    CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
REVIEW OF 2017

particularly strong demand emanating for Build-to-Rent (BTR)            on property and pension fund values in Q4 and as a result the
opportunities fuelled by the severe shortage of housing supply          total return from Irish real estate in 2017 will now come in at a
in core cities such as Dublin. We also noticed an increase in           lower level than had been anticipated. Nonetheless, the rate of
appetite for opportunities in healthcare.                               return remains attractive relative to other jurisdictions, investor
                                                                        appetite remains healthy and with occupier market activity
Although prime yields across Europe continued to harden                 remaining particularly strong and our economy on target to
throughout 2017 due to the weight of money chasing real estate          outperform most of the rest of Europe for a fifth consecutive
investment opportunities, prime yields in Ireland remained              year in 2018, the prospects for the commercial real estate sector
largely flat until late in the year when we saw yield hardening         for the year-ahead remain positive.
occurring in some sectors. There is therefore considerable
arbitrage between prime yields in Dublin and other European             “We were honoured to have been
capitals, which bodes well for continued investor interest in the
capital and indeed other cities such as Cork in 2018.
                                                                        involved in some of the most prestigious
                                                                        real estate transactions in Ireland during
“A notable increase in residential                                      the last year”
properties being sold for investment
purposes with particularly strong                                       CBRE continued to invest heavily in all service lines of our local
demand emanating for Build-to-Rent                                      business throughout 2017 and we were honoured to have been
                                                                        involved in some of the most prestigious real estate transactions
(BTR) opportunities”
                                                                        in Ireland during the last year. We opened a new regional office
                                                                        in Cork during 2017 and look forward to servicing our clients
The Irish commercial property market was on target to achieve a         and introducing occupiers and investors alike to opportunities
total return of between 8% and 10% in 2017. However, this was           in the Munster region over the course of 2018 and beyond.
affected by the surprise announcement in Budget 2018 that               We look forward to working with you in 2018 and thank you
commercial stamp duty would increase from 2% to 6% with                 sincerely for your continued support.
immediate effect. This second unexpected change to taxation
policy in two years affected sentiment and impacted negatively          Enda Luddy, Managing Director, CBRE Ireland

© 2018 CBRE U.C.                                IRELAND REAL ESTATE MARKET OUTLOOK 2018                                     CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
M ARKET OUTLOOK

        C O N T I N U E D F LO W S O F C A P I TA L I N T O
        A LT E R N AT I V E S E C T O R S D U R I N G 2 0 1 8

                    While the direction of the Irish commercial property market is largely a function of
                    domestic economic and demographic drivers, it is also heavily influenced by global
                    trends. There is no doubt that both global and local economics, tax and politics will
                    have a significant bearing on the performance of the Irish real estate sector again in
                    2018.
In terms of economics, the international economic environment              Attention will now move to future trade and migration
looks likely to be relatively benign in 2018 with a largely positive       arrangements, both of which are hugely important for Ireland.
economic backdrop expected to continue to prevail in mainland              The UK Parliament, EU Council of Ministers and European
Europe in 2018 and 2019, which is encouraging. Ireland is                  Parliament must ratify any deal agreed between the UK and the
particularly well placed with expected GDP growth rates well               EU before March 2019. Therefore, negotiations must reach a
ahead of the Western European average in the period, which in              conclusion before the end of this year to provide time for
turn bodes well for the Irish commercial real estate sector. At            ratification.
this juncture, it seems like the next major headwind for Europe
will be an anticipated cyclical downturn in the US in late
2019/2020 with a resulting gradual unwinding of quantitative               “European interest rates unlikely to
easing, which has been so supportive of the real estate                    increase dramatically during 2018”
investment market over recent years. Once monetary policy
becomes less accommodative, there is potential for yields to
soften. For the next 12 months however, we expect to see                   Focusing on the outlook for real estate specifically, Europe looks
continued disparity between Federal Reserve, Bank of England               set for another year of robust investment activity in 2018
and ECB monetary policy with European interest rates unlikely              supported by positive occupier and investment fundamentals.
to increase dramatically during 2018. This will support                    Ireland is certain to perform well considering the volume of
continued investment activity in Ireland over the course of the            occupier activity evident in the market, the strength of the
next 12 months.                                                            underlying economy and its demographic profile.
                                                                           Ireland’s market fundamentals remain compelling in a
“We are expecting to see increased focus                                   European context. Although Brexit will for the most part be
                                                                           negative for the Irish economy and indeed most sectors of the
on tax competition during 2018”
                                                                           commercial real estate sector, the Dublin office market is
                                                                           expected to continue to benefit from Brexit and shadow-Brexit
In terms of taxation, it remains to be seen what impact recent             location decisions throughout 2018. We are confident of
US tax changes will have for the Irish market. In any event, we            continued strong take-up activity in this sector over the next 12
are expecting to see increased focus on tax competition during             months, with the bulk of activity expected to emanate from the
2018, with developments in the US and Europe being of                      expansion of existing occupiers. A key trend will be the increase
particular relevance to Ireland, which has long benefitted from            in demand for co-working and flexible office accommodation in
its relatively competitive corporate tax rate of 12.5%. Relying            the Irish market. We also expect to see a much greater focus on
solely on this element of Ireland’s offer to sustain foreign direct        placemaking in an effort to rejuvenate certain parts of cities and
investment and job creation is clearly not sustainable long-               attract occupiers to these locations. Secondary and provincial
term.                                                                      office buildings look set to see the best rental growth
                                                                           performance during 2018 with prime rents in the Cork market
Global politics aside, 2018 will obviously be crunch time for              expected to increase by as much as 10% during the next 12
Brexit negotiations. This will have particular ramifications for           months.
the Irish economy and in turn its commercial real estate sector.

© 2018 CBRE U.C.                                 IRELAND REAL ESTATE MARKET OUTLOOK 2018                                       CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
M ARKET OUTLOOK

A scarcity of premises in the most highly sought-after locations          Over the next 12 months, we expect to see continued appetite
in Ireland is likely to continue to frustrate retailers in 2018           from existing and new investors chasing product and yield in an
although there are now signs of new retail supply coming on               effort to deploy capital in the European real estate sector.
stream, both in terms of new development commencing and                   Ireland is well placed to benefit from this and looks likely to
new planning applications being lodged, which will help                   attract some further new entrants. With regard to Asian capital,
alleviate this pressure in due course. As some investors and              which is expected to be particularly active in Europe in 2018, it
occupiers grapple with fundamental structural issues facing the           remains to be seen how engaged it will be in the Irish market.
retail sector, we are likely to see greater appetite for the better       Bizarrely, it is now easier to raise capital than to deploy it, with
performing high streets, shopping centres and retail park                 the biggest challenge continuing to be the ability to source core
schemes, from both occupiers and investors alike. New entrants            deals at this mature stage of the cycle.
are likely to be particularly attracted to any new accommodation
that comes available.                                                     “Secondary and provincial office
                                                                          buildings look set to see the best rental
“The Dublin office market is expected to
                                                                          growth performance during 2018”
continue to benefit from Brexit and
shadow-Brexit location decisions                                          While yields for prime investment product in Europe are not
throughout 2018”                                                          expected to compress significantly further in 2018, Ireland
                                                                          could prove the exception to this trend considering the fact that
                                                                          yields remain higher than previous peak levels unlike most
In the industrial and logistics sector, we anticipate a substantial       other European markets. This should bolster international
increase in speculative development in Dublin from this point             appetite for Irish real estate opportunities over the next
forward, now that prime headline rents have reached a level that          12-month period, with particular focus on core
renders new development economically viable. We will also see             income-producing investments in both Dublin and Cork. We
some new speculative development occurring in the Cork                    expect to see greater focus on tenant risk, the security of rental
market this year. We expect to see headline rental values in              income and potential for voids as investors look to underwrite
Dublin increasing by up to 11% during 2018.                               transactions at this point in the cycle, where the greatest focus
                                                                          is on income.

© 2018 CBRE U.C.                                  IRELAND REAL ESTATE MARKET OUTLOOK 2018                                       CBRE RESEARCH

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REAL ESTATE 2018 IRELAND - CBRE RESEARCH - CBRE Hotels
M ARKET OUTLOOK

In addition to demand for office and industrial & logistics               requirements in various sectors of the market. However,
opportunities, we expect to see continued flows of capital into           changes to the Capital Gains Tax waiver scheme announced in
alternative sectors over the course of the next 12 months with            last October’s Budget may release some assets to the market a
particularly strong demand for residential investment                     little earlier than originally anticipated, which will help the
opportunities in Dublin, considering the stable long-term                 situation. This will be particularly welcome in the development
income streams this sector can deliver. Alternative sectors will          land sector where there is a severe shortage of sites to satisfy
become increasingly mainstream.                                           end-user demand. The implementation of a Site Value Tax from
                                                                          2019 onwards may also release some more land to the market in
                                                                          2018. The shortage of both private and public-sector housing in
“We expect to see continued flows of                                      key cities such as Dublin is likely to continue to dominate
capital into alternative sectors over the                                 headlines throughout 2018. Improving supply and facilitating

course of the next 12 months with                                         more efficient use of existing housing stock will therefore
                                                                          continue to be a priority focus for Government for the year
particularly strong demand for residential                                ahead.
investment opportunities in Dublin”
                                                                          “Improving supply and facilitating more
While there have been improvements to the planning process                efficient use of existing housing stock will
over the last 12 months and welcome announcements from the
                                                                          therefore continue to be a priority focus
Minister for Housing in relation to the potential relaxation of
density requirements and design standards, we now need to see             for Government”
these proposals being enacted so that developers can proceed
with delivering much-needed residential product. We envisage
an improvement in the volume of delivery of residential                   The need for improved transparency and accurate market
accommodation in the Irish market over the next 12 months,                statistics to better guide policy-making and decision-making
however, this is coming from an extremely low base, so we will            will continue to be topical and we anticipate a strong focus by
unfortunately continue to see huge supply-demand imbalances               the Property Services Regulatory Authority (PSRA) on enforcing
prevailing in this sector for some time yet.                              use of the Commercial Lease Database over the course of the
                                                                          next 12 months.
The tourism sector looks set to perform well again in 2018
which bodes well for the hotel market. Unlike last year, we               In summary, while the Irish CRE market is now approaching
expect to see some Dublin hotels being offered for sale during            late cycle in many respects, occupier activity remains robust,
2018, which in turn will boost overall transaction volumes in             development is controlled, the market is priced attractively
this sector. If this materialises, we could see up to €500 million        compared to the rest of Europe and there are still considerable
of hotel trades in the Irish market in 2018. As is the case               opportunities for both occupiers and investors alike. CBRE look
elsewhere in Europe, we are increasingly seeing investment                forward to working with you in what promises to be another
appetite for hotel properties and we therefore expect to see an           active year for the Irish commercial real estate sector.
increasing proportion of Irish hotels being traded as
investments over the next couple of years.                                Marie Hunt, Executive Director & Head of Research, CBRE
                                                                          Ireland

The biggest challenge in the Irish commercial real estate sector
in 2018 is likely to be a continued shortage of product to satisfy

© 2018 CBRE U.C.                                IRELAND REAL ESTATE MARKET OUTLOOK 2018                                        CBRE RESEARCH

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© 2017 CBRE, Inc.   GLOBAL REAL ESTATE MARKET OUTLOOK 2018   CBRE RESEARCH

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FUNDING OUTLOOK

      INCREASING COMPETITION BETWEEN
     BANK AND NON-BANK LENDERS IN THE
            D E V E LO P M E N T S E C T O R

                   During 2017, we expected two main market trends, (i) a significant wave of refinances
                   from the loan books purchased by funds and other entities over the last number of years
                   and (ii) the re-emergence of commercial and residential development finance, possibly
                   on a speculative basis. To an extent, fuelled by a competitive funding environment, both
                   occurred.

There has been a notable improvement in the availability of                transactions have already made a comeback in the commercial
bank funding for good income producing commercial and                      sector. Investors seeking private rented schemes are now
residential real estate over the past year. Both local and                 prepared to forward fund well-located developments with
domestic banks have been active in the market. However, due                credible counterparties.
diligence requirements have impacted significantly the length
of time required to complete the transactions. ‘Loan-to-Value’             The growing participation of non-bank lenders in the
ratios continue their recovery. However, the regulatory                    residential development market is very welcome and in many
environment continues to make it costly, and therefore less                cases, they can fill the gap between the funding available from
attractive, for traditional banks to fund short term leases or on a        traditional banks and the equity available from the promoters.
long-term basis. In response, several new sources of alternative           Over the last 12 months, the number of lenders in this space has
funding have emerged, with non-Irish banks, insurance                      increased and pricing has moderated. Whilst their preference is
companies and alternative funders, growing their share of the              for schemes with “ready-to-go” planning, they will lend to
Irish market. The lending parameters, scope, return                        schemes where planning is being advanced, provided they can
requirements and risk appetite of these lenders vary                       get comfortable with the planning proposals.
considerably and some real estate investors are finding it
increasingly difficult to identify the most appropriate lending            The preferred transaction for alternative lenders is as follows:
partner and debt structure for their specific investment.
Whilst liquidity for smaller, secondary properties and
non-income producing assets such as development land
                                                                                                LENDING UPWARDS OF €10
without planning, has remained difficult and expensive, we have
                                                                                                MILLION
seen an increase in risk appetite of certain lenders.

“There has been a notable improvement
in the availability of bank funding for                                                         PROVIDING STRETCH SENIOR
good income-producing commercial and                                                            FINANCING OF UP TO 90% OF
                                                                                                THE OVERALL PROJECT COST,
residential real estate over the past year”                                                     65% OF EX VAT SALES PRICES.

For non-speculative development, there has been a significant
improvement in the availability of funding from traditional                                     NORMALLY PROVIDE LOAN
bank and alternative lenders. Indeed, the development sector is                                 TERMS OF UP TO 36 MONTHS,
no longer reliant on one form of capital; with a myriad of                                      BUT CAN CONSIDER LONGER
                                                                                                (UP TO 60 MONTHS).
different funders actively seeking viable projects both in the
residential and commercial sectors. Forward funding

© 2018 CBRE U.C.                                IRELAND REAL ESTATE MARKET OUTLOOK 2018                                      CBRE RESEARCH

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FUNDING OUTLOOK

The pricing structure typically comprises an arrangement fee,            evolution of a more corporate type debt funding market for this
upfront or rolled up, a coupon and an exit fee depending on the          sector in the medium term, particularly if the developer can
leverage levels being offered and the individual merits of each          demonstrate an ability to commence construction on a pipeline
opportunity.                                                             of sites.

“For non-speculative development, there                                  “CBRE Capital Advisors have strong
has been a significant improvement in                                    connectivity into various funding sources,
the availability of funding from traditional                             from banks to alternative lenders”
bank and alternative lenders”
                                                                         CBRE Capital Advisors have strong connectivity into various
We have provided assistance to several developers over the last          funding sources, from banks to alternative lenders, which
year on their applications. The key to accessing funding from            enables us to source debt and equity on a wide range of
any lender will be a proposal that will stand up to the due              proposals. Our Irish team provide the full range of corporate,
diligence process, focusing on previous experience,                      structured finance and capital raising services required in
management team, building capacity, key contractor                       response to the increasing difficulty, complexity, and
relationships, execution ability and access to pipeline sites.           uncertainty sponsors are faced with when trying to access
There is intense competition between the bank and non-bank               capital. Over the past year, we have successfully raised over €500
lenders to provide site acquisition, construction, infrastructure        million for clients including Ballymore, Kennedy Wilson,
and the capitalisation of interest, to strong promoters in the           Harcourt Developments and John Flanagan Developments. Our
main urban centres of greater Dublin, Cork and Galway.                   pipeline for 2018 looks very promising, which is a clear
Traditional banks are particularly targeting the more                    indication of the strength of the funding market.
established housebuilders with a strong pipeline of schemes of
either houses or multi-family accommodation. They want to                Patrick Phelan, Director, CBRE Capital Advisors
lend on a “site-by-site” basis, however we expect to see the

© 2018 CBRE U.C.                                IRELAND REAL ESTATE MARKET OUTLOOK 2018                                      CBRE RESEARCH

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OFFICE OUTLOOK

             SCARCITY OF PRIME OFFICE STOCK
                WILL CONTINUE TO PREVAIL

2017 proved to be a record year for the Dublin office market with          approximately *240,000m2 of new office stock to be delivered in
more than 330,000 square metres of take-up recorded. While the             the capital in 2018 of which a sizeable proportion has been
bulk of activity comprised small-to medium sized lettings,                 pre-let.
take-up was boosted in no small part by the signing of several
large lettings in schemes that were under construction and in              Prime headline office rents in the capital rose further during the
most cases nearing completion - a number of which were either              last 12 months although the pace of rental inflation eased
directly or indirectly Brexit-related. The volume of lettings to UK        considerably compared to 2015 and 2016. Headline rents
tenants doubled year-on-year, demonstrating the extent to                  reached €700 per square metre by the end of last year and we
which Brexit added a welcome layer of additional demand to the             expect that headline rents will remain relatively stable at this
Dublin market during 2017. The sale of a building to JP Morgan             level throughout 2018. There may, however, be some exceptions
at Capital Dock in Dublin Docklands was the most significant               where small suites or superior buildings achieve premium
Brexit-related transaction recorded. Meanwhile, the letting of             rental values. Office tenants who plan in advance will be able to
20,074m2 in the other two office blocks in this scheme to Indeed           lock into better deals that those who procrastinate. The best
towards year-end was particularly noteworthy, being one of the             prospects for rental growth in the office sector in 2018 will be in
largest office lettings ever signed in Dublin.                             buildings in secondary and provincial locations.

“The vast majority of new office supply                                    Despite the volume of construction that is underway in Dublin

delivered in the calendar year was                                         and the amount of grey space coming available as occupiers
                                                                           move to new premises, we expect that a scarcity of prime office
accounted for by year-end, which                                           accommodation will continue to prevail in the capital during
demonstrates the extent to which the                                       2018. This in turn will see some occupiers committing to
                                                                           schemes that are still in the process of being constructed,
development pipeline is controlled in this
                                                                           particularly those that are nearing completion. However, we also
cycle”                                                                     expect to see an increase in true pre-lettings this year as
                                                                           occupiers commit to schemes that have not yet commenced
Several office occupiers who leased more accommodation than                construction despite having obtained the relevant planning
they required in recent years with a view to sub-letting part in           permissions. Securing pre-lettings will unlock development
due course ultimately expanded into the excess accommodation               funding for many of these projects, which continues to prove
adding to supply pressures over the last 12 months. The largest            elusive for speculative development.
office leasing transactions completed in Dublin during 2017
primarily emanated from expansion activity resulting in                    We expect occupiers in the technology and financial services
significant net absorption. The quality of the tenant profile was          sectors to dominate again in 2018 with an increasing proportion
particularly encouraging.                                                  of Dublin leasing activity likely to occur in the suburbs of the
                                                                           city as occupiers move some functions of their business to more
Considering the strength of underlying demand, office                      cost-effective locations. This in turn will encourage some
development continued at pace throughout 2017.                             additional office development in the suburbs in 2018. Occupiers
Encouragingly, the vast majority of new office supply delivered            are comfortable moving some elements of their operations to
in the calendar year was accounted for by year-end, which                  locations outside of the traditional CBD as long as they retain
demonstrates the extent to which the development pipeline is               the ability to attract talent.
controlled in this cycle. The delivery dates for several large
schemes have now been pushed out, primarily due to delays in               As the year progresses, we expect a growing number of Brexit-
securing development funding. Nevertheless, we expect                      related mandates to solidify, with occupiers who heretofore have

                                                                           *Figure updated as @ 8th January 2018.

© 2018 CBRE U.C.                                 IRELAND REAL ESTATE MARKET OUTLOOK 2018                                        CBRE RESEARCH

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OFFICE OUTLOOK

 been exploring options, now committing to specific buildings.                      collaboration between landlords and tenants. We expect to see
 In addition to well-publicised moves that are directly                             increased demand for flexible office accommodation in 2018
 attributable to Brexit, we expect to see a large shadow-Brexit                     having seen occupiers such as WeWork signing their first leases
 effect with companies who are concerned about future permit                        in the Dublin market during the last 12 months. Companies
 and visa requirements in the UK, choosing to increase their                        need accommodation that can adapt, shrink or expand to meet
 workforce in other European capitals such as Dublin instead.                       the needs of their organisation and landlords are beginning to
 The scarcity of residential rental accommodation to                                recognise the importance of a flexible offering to complement
 accommodate the growth in office-based employment in Dublin                        traditional leased office accommodation. Occupiers
 continues to be a concern for many occupiers although we                           increasingly require touchdown space when they enter a new
 expect pressure to be alleviated somewhat in 2018 as new                           market until they have visibility on their medium and long-term
 residential supply starts to come on stream in various locations                   space requirements, a point that is hugely relevant in a Dublin
 in and around the capital. In this regard, the delivery of new                     context considering the extent of reliance the city’s office
 Build-to-Rent schemes close to key transport nodes is hugely                       market has on technology sector tenants in particular.
 important.
                                                                                    While some occupiers will have a preference to sign short leases
 The office market is evolving and maturing, responding to                          due to new lease accounting rules that require leases to be fully
 occupier requirements for quality accommodation, more                              accounted for on balance sheet, the reality is that the balance of
 efficient use of office space and enhanced flexibility. Tenants are                power in the Dublin office market will remain firmly with
 increasingly mindful of flexible working trends and the                            landlords for the foreseeable future. We therefore expect to see
 potential of artificial intelligence when they are reviewing future                long leases and a relatively low level of incentives and
 accommodation needs. This will necessitate even greater                            inducements continuing to prevail.

 Figure 1: Dublin Office Take-Up vs. Vacancy 2007 - 2017

              350          Gross Take-Up                     Vacancy Rate

              300                                                                                                                       25.00%

              250
                                                                                                                                        20.00%

              200
                                                                                                                                        15.00%
Sq M '000's

                                                                                                                                                   Vacancy Rate

              150
                                                                                                                                        10.00%
              100

                                                                                                                                        5.00%
               50

                0                                                                                                                       0.00%
                    2007

                             2008

                                           2009

                                                  2010

                                                              2011

                                                                        2012

                                                                                      2013

                                                                                                2014

                                                                                                          2015

                                                                                                                    2016

                                                                                                                              2017

 Source: CBRE Research

 © 2018 CBRE U.C.                                        IRELAND REAL ESTATE MARKET OUTLOOK 2018                                         CBRE RESEARCH

                                                                               15
OFFICE OUTLOOK

While Dublin is expected to continue to attract the lion’s share             We therefore expect another strong year of take-up activity in
of occupier activity in 2018, we anticipate an escalation in office          the Dublin office market in 2018 although it remains to be seen
development in other cities during the next 12 months with                   if last year’s record performance can be replicated. In any event,
planning permission in place for a number of significant office              the continued strength of this sector of the occupier market will
developments in Cork, Limerick and Galway.                                   continue to copperfasten investor demand for office properties
                                                                             in the Irish market in 2018.
The demand pipeline as we enter 2018 is particularly healthy.
In addition to accommodating continued foreign direct
investment, there are several sizeable expansion requirements
to be fulfilled over the course of the next 12 months.

   Sale of One Capital Dock, Dublin 2 to JP Morgan on behalf of Kennedy Wilson

© 2018 CBRE U.C.                                   IRELAND REAL ESTATE MARKET OUTLOOK 2018                                       CBRE RESEARCH

                                                                        16
Pre-letting of 3,437m2 at One Molesworth,
   Molesworth Street, Dublin 2 to Barclays on
   behalf of Green REIT plc

   Letting of 8,361m2 to Fleetmatics at The Atrium, Sandyford,          Letting of 5,146 m2 at Iveagh Court, Dublin 2 to WeWork - their first
   Dublin 18 on behalf of Blackstone                                    letting in Dublin

                                                                        Joint letting agents on Dublin Landings office scheme at Dublin
                                                                        Docklands on behalf of Ballymore Oxley, with two significant lettings to
                                                                        the NTMA completed during 2017

© 2018 CBRE U.C.                                    IRELAND REAL ESTATE MARKET OUTLOOK 2018                                         CBRE RESEARCH

                                                                      17
© 2017 CBRE, Inc.   GLOBAL REAL ESTATE MARKET OUTLOOK 2018   CBRE RESEARCH

                                     18
RETAIL OUTLOOK

 CONTINUED STRONG DEMAND FOR PRIME
   H I G H S T R E E T A N D R E TA I L S C H E M E S

Although undertones of negativity appeared in commentary                    pressure. In line with trends elsewhere in Europe, we are
about the retail sector and property market in 2017, the reality            continuing to see existing shopping centres expanding their
is that the sector performed well last year with consumer                   footprint. Most are adding accommodation such as a tailored
sentiment, retail sales and footfall all broadly positive. We saw           food & beverage offer and a more diverse range of leisure as well
continued strong demand for stores on the best retail high                  as focussing on placemaking to increase dwell times and boost
streets, shopping centres and retail parks throughout the                   footfall. All the M50 shopping centres on the outskirts of Dublin
country. Transactional activity in 2017 largely emanated from a             (including The Square, which traded last year) have, or are in the
relatively small pool of retailers. There were however several              process of obtaining, planning permission to facilitate
notable transactions negotiated with new entrants to the Irish              extensions. A number of suburban schemes including Frascati
market such as Hotel Chocolat, Victoria’s Secret, The Range,                Shopping Centre, Dun Laoghaire Shopping Centre, Blackrock
Homesense, Smiggle, Dr Martens, Urban Decay and The Ivy.                    Shopping Centre and Stillorgan Shopping Centre in south
                                                                            Dublin are upgrading their offerings by carrying out extension
                                                                            and refurbishment works. Several planning applications for new
“Transactional activity in 2017 largely                                     retail schemes are due to be lodged in 2018 including a scheme
emanated from a relatively small pool of                                    in Carrickmines in south Dublin while planning for a scheme in
                                                                            Cherrywood was lodged last year. In addition, we may see some
retailers”
                                                                            movement on the long-awaited Clery’s redevelopment on
                                                                            O’Connell Street in the capital later this year. Outside of Dublin,
The leisure, food & beverage and beauty & cosmetics sectors                 there is limited new retail supply planned.
were particularly active and there was a notable improvement in
demand for units in retail parks from homeware and furniture                Retailers continue to focus on establishing flagship stores in key
retailers, which is perhaps not surprising considering the                  schemes and high streets. Dublin is now firmly on the radar of
volume of housebuilding that is now underway and likely to                  many international retailers looking to grow their portfolio in
escalate further in 2018.                                                   Europe while Irish retailers are also increasingly active.

UK retailers were less active than normal in 2017 for a number              Competitive tension for stores on some of the better performing
of reasons including Brexit uncertainty although several UK                 high streets, shopping centres and retail parks, where vacancy is
retailers made some strategic expansion and relocation                      negligible, will see further retail rental growth being achieved.
decisions in the Irish market during the year. There was much               With retailers’ increasingly focussing attention on a relatively
discussion about leakage to Northern Ireland due to the Sterling            small pool of core locations and schemes, we expect to see an
Euro exchange rate and the ever-increasing move towards                     increase in rental growth in the most sought-after streets and
online retailing. However, the most notable underlying                      schemes but remaining relatively flat elsewhere during 2018. It
frustration in the retail sector in Ireland during 2017 was the             will be increasingly necessary to evaluate secondary and
scarcity of stores in prime locations. One sign of this                     provincial properties on their own merits as opposed to
competitive tension was a return of ‘key money’ being paid by               collectively from this point forward. The need for astute asset
restauranteurs for some prime pitches in Dublin city centre.                management will really come to the fore this year with rental
                                                                            growth likely to prove elusive in schemes that are not being
A scarcity of premises in the most highly sought-after locations            managed optimally. We expect to see break options in leases
is likely to continue to frustrate retailers in 2018. However, there        continuing to move out over the course of the next 12 months
are now signs of new retail supply coming on stream, both in                with landlords seeking longer term certain leases and reducing
terms of new development commencing and new planning                        incentives for prime units.
applications being lodged, which will help alleviate this

© 2018 CBRE U.C.                                 IRELAND REAL ESTATE MARKET OUTLOOK 2018                                        CBRE RESEARCH

                                                                       19
RE TAIL OUTLOOK

Several Irish retailers have focussed huge attention on                  important as the role of the traditional store changes leading to
improving their multichannel strategies over recent years and            further blurring of the lines between retail and industrial
this is going to become increasingly important. Those that               property over the next few years.
haven’t embraced omnichannel will ultimately struggle. The
physical store and its relationship to the consumer will continue        “Dublin is now firmly on the radar of
to be hugely topical in 2018 with physical stores becoming               many international retailers looking to
increasingly focused on consumer experience and an increasing
proportion of consumers opting to shop online in addition to
                                                                         grow their portfolio in Europe while Irish
shopping in-store. The logistics sector will become increasingly         retailers are also increasingly active”

    Leasing agents on Dundrum Town Centre, Dublin on behalf of
    Hammerson plc having introduced a number of new brands
    including Hotel Chocolat and Smiggle during 2017

© 2018 CBRE U.C.                                 IRELAND REAL ESTATE MARKET OUTLOOK 2018                                    CBRE RESEARCH

                                                                    20
Acquired a number of large retail warehousing
                                                                                 units for Homestore & More in both ROI and
                                                                                 Scotland and several stores for EZ Living and
                                                                                 Maxi Zoo around Ireland during 2017

                                                                                 Advised Lidl on more than 20 retail transactions during 2017
                                                                                 including site and store acquisitions, new lettings and disposals
                                                                                 throughout Ireland

   Retail agents for Green REIT plc for whom we successfully completed         Leasing agents on Frascati Shopping Centre extension, Blackrock,
   transactions with 2 new entrants to the Irish market in 2017, namely        Co. Dublin, which is due for completion in early 2018
   The Ivy Restaurant Group and Homesense

© 2018 CBRE U.C.                                    IRELAND REAL ESTATE MARKET OUTLOOK 2018                                           CBRE RESEARCH

                                                                          21
I N D U S TRI A L & LOGISTICS OUTLOOK

   I N D U S T R I A L & LO G I S T I C S S E C T O R L I K E LY
        TO OUTPERFORM OTHER SECTORS
                          IN 2018

Occupier demand for logistics property across Europe continues              are likely to be redeveloped for higher value alternative uses
to grow strongly. This is clearly evident in the Irish market with          such as Build-to-Rent over the next few years, which will reduce
strong demand for modern industrial & logistics properties and              supply even further.
development sites in core locations, particularly around
Dublin’s M50 and Little Island in Cork. Last year was                       We expect new development to be largely concentrated in the
characterised by severe shortages of modern industrial and                  northern section of the M50 motorway around Dublin Airport
logistics stock to satisfy demand, which in turn fuelled rental             and along the N7 motorway, where demand is particularly
growth and impacted negatively on take-up volumes. We expect                strong. Outside of Dublin and Cork, speculative development is
that this will alleviate somewhat in 2018, as new supply finally            unlikely to materialise to any great degree in any other Irish
starts to materialise. This sector will firmly move into the                cities during 2018.
development phase of the cycle during 2018 with new industrial
and logistics facilities due to be delivered and a corresponding            From a design perspective, we envisage increased eaves heights
uplift in transactional activity anticipated.                               being incorporated into new logistics buildings with 12 metre
                                                                            minimum clear internal heights becoming increasingly
“Strong demand for modern industrial &                                      standard specification for units larger than 3,000 square metres.
                                                                            We also expect substantial capital expenditure focused on
logistics properties and development sites
                                                                            increasing mechanisation and automation within facilities.
in core locations, particularly around
Dublin’s M50 and Little Island in Cork”
                                                                            “Prime headline industrial rents in Dublin
                                                                            are expected to rise by approximately
Until there is a meaningful improvement in new supply, prime
rents in the industrial sector are expected to continue to rise.            11% in 2018, reaching €110 per square
Having increased by 6% during 2017, prime headline industrial               metre or €10.25 per sq. ft. by year end”
rents in Dublin are expected to rise by approximately 11% in
2018, reaching €110 per square metre or €10.25 per sq. ft. by
year end. As a result, the industrial and logistics sector is likely        We believe that an increasing proportion of industrial & logistics
to outperform many other sectors in 2018 and will therefore                 occupiers will have a preference to own premises as opposed to
remain particularly attractive to investors, although sourcing              leasing them when new lease accounting rules come into effect
investment grade logistics assets is expected to remain                     in 2019 on the basis that entire leases will have to be accounted
challenging.                                                                for on balance sheet. Despite pressure from occupiers for
                                                                            shorter leases, landlords and indeed funders will continue to
We anticipate a substantial increase in speculative development             push for longer leases and we expect most leases signed in 2018
in Dublin from this point forward, now that prime headline                  to extend to durations of at least 10 years as opposed to 5 years,
rents have reached a level that renders new development                     which has been commonplace in recent years. Incentives and
economically viable. We also expect an increase in                          inducements will also become less significant in prime
owner-occupiers developing their own facilities over the course             locations where availability is limited.
of the next 12 months. However, we remain concerned about the
scarcity of fully zoned and serviced land to facilitate                     An increasing proportion of demand in the Irish market is
development in prime locations around Dublin’s main arterial                emanating from the supply chain sector with a particular focus
routes, where many of these occupiers are primarily focussed.               on last mile delivery, as online sales continue to grow
Several older industrial locations close to Dublin’s city centre            year-on-year and retailers develop their omnichannel and

© 2018 CBRE U.C.                                  IRELAND REAL ESTATE MARKET OUTLOOK 2018                                       CBRE RESEARCH

                                                                       22
© 2017 CBRE, Inc.   GLOBAL REAL ESTATE MARKET OUTLOOK 2018   CBRE RESEARCH

                                     23
I N D U S TRI A L & LOGISTICS OUTLOOK

distribution platforms. In addition, Brexit uncertainty is leading             Whilst we expect Cork to emerge as a new data centre market in
some occupiers to consider establishing dedicated distribution                 2018, Dublin is firmly viewed as ‘the hyperscale capital of
facilities in Ireland as opposed to shipping goods through ports               Europe’ and we forecast continued growth within the wholesale
or bringing them across the border from Northern Ireland.                      and retail co-location market over the next 12 months.
Approximately one third of industrial and logistics take-up in
the UK now comprises companies involved in online sales or
                                                                               “Dublin is firmly viewed as ‘the
e-commerce fulfilment. While Ireland has a long way to go in
this respect, online sales activity continues to rise and we expect            hyperscale capital of Europe’”
to see this manifesting in heightened demand for logistics and
distribution facilities over the next number of years.                         In summary, 2018 looks set to be very active for this sector of the
                                                                               Irish property market with the next phase of new development
We also anticipate continued appetite for suitably serviced data               kicking off in earnest.
centre sites to accommodate hyperscale occupiers around the
country as the fibre network continues to improve and expand
in terms of coverage.

   Acquisition of 2,705m2 on behalf of Dnata at Dublin Airport Logistics Park, Co. Dublin

© 2018 CBRE U.C.                                    IRELAND REAL ESTATE MARKET OUTLOOK 2018                                        CBRE RESEARCH

                                                                          24
Lease acquisition of 4,640m2 on behalf of international luxury
   goods company at Horizon Logistics Park, Co. Dublin

   Disposal of 8,559m2 former Electrolux facility at Naas Road, Dublin 12        Advisory role on Epark development, Little Island, Cork on
                                                                                 behalf of JCD

                                                                                  Disposal of 10 acres of industrial zoned land at Kingswood
                                                                                  Business Park, Dublin 24 on behalf of Cerberus

© 2018 CBRE U.C.                                    IRELAND REAL ESTATE MARKET OUTLOOK 2018                                        CBRE RESEARCH

                                                                            25
I N V E STMENT OUTLOOK

         D E P LOY I N G C A P I TA L W I L L C O N T I N U E
             TO BE THE BIGGEST CHALLENGE
                        FOR INVESTORS

Although the investment sector of the Irish commercial real               Although prime yields in some sectors of the Irish market such
estate market was busy throughout last year, the overall volume           as offices and multifamily residential hardened by as much as
of transactional activity recorded in 2017 was considerably               50 basis points in the latter half of 2017, yields in the Irish
lower than in the 2014-2016 period, which was characterised by            market remain attractively priced compared to other locations,
large scale deleveraging and loan sale activity. In the absence of        which is significant in terms of attracting international capital.
any large portfolio sales last year, the volume of investment             Yields in Irish cities other than Dublin are priced even more
spend was approximately 40% lower than that recorded in the               attractively and we expect to see investor appetite for prime
previous year with an increasing proportion of this spend                 investment opportunities in cities such as Cork, Limerick and
occurring outside of Dublin. The likelihood is that                       Galway over the next 12 months.
transactional activity in 2018 will be broadly similar to last
year’s outturn, as the market returns to a more normalised level          With little room for significant yield compression from this
of trading.                                                               point, we expect investors to become increasingly focussed on
                                                                          the income-generation potential of investments. Investors are
“The likelihood is that transactional                                     likely to focus most attention on investment opportunities in
activity in 2018 will be broadly similar to                               the office and industrial & logistics sectors in 2018 considering
                                                                          the underlying strength of the occupational market and
last year’s outturn, as the market returns
                                                                          additional demand that is materialising as a result of Brexit.
to a more normalised level of trading”
                                                                          “Yields in the Irish market remain
Total returns from Irish commercial real estate in 2017 were
                                                                          attractively priced compared to other
negatively impacted by an unexpected trebling of the rate of
stamp duty on ‘non-residential’ transactions implemented in               locations, which is significant in terms of
last Autumn’s Budget. While this did significant reputational             attracting international capital”
damage, and impacted negatively on property valuations and
pension fund values, thankfully it doesn’t appear to have
dampened investor appetite for Irish commercial real estate to            There remains scope for rental growth in the office sector,
any great degree.                                                         particularly in secondary and provincial locations. We are also
                                                                          confident that the limited supply of stock will drive further
As has been the case throughout Europe, low interest rates and            rental growth in the industrial & logistics sector in 2018. As new
a lack of investment opportunities in other asset classes has led         office and industrial buildings are leased, this in turn will create
to a significant weight of capital chasing real estate investment         much needed investment product, albeit many of these
in the Irish market in recent years. However, the scarcity of core        transactions are likely to occur off-market and possibly in
product proved challenging for the many investors seeking to              advance of construction completing.
deploy capital in Ireland during 2017. Encouraged by the strong
economic backdrop, the strength of underlying occupier activity           We also expect to continue to see institutional capital targeting
and the potential for both rental growth and yield compression,           opportunities to partner with local developers to provide
the pool of international investors focussing attention on                scalable investment in the emerging residential investment
investment opportunities in the Irish market deepened                     sector during 2018. The Build-to-Rent model offers defensive
considerably over the last 12 months. Some of this increase in            income characteristics, which is very appealing to investors in
appetite from core and core plus investors who are largely                the current climate. We therefore expect to see continued flows
focussed on wealth preservation was fuelled by comparative                of capital into the alternative sector over the course of the next
pricing in other European capitals where yields in many cases             12 months with particularly strong demand for residential
hit all-time lows during 2017.                                            investment opportunities in Dublin.

© 2018 CBRE U.C.                                 IRELAND REAL ESTATE MARKET OUTLOOK 2018                                        CBRE RESEARCH

                                                                     26
I N VE STMENT OUTLOOK

                                                                          Investment sales are likely to predominately emanate from
Other than prime high street and the better performing                    investors seeking to capitalise on the yield compression
shopping centres and retail parks, which will continue to be              witnessed over the last 12 months while we also expect to see
highly sought after from occupiers and investors alike, we                some long-term owners rebalancing their portfolios by
expect to see a thinner pool of investors focussing on secondary          disposing of older assets in order to redeploy capital. Because
and provincial retail investment opportunities over the next 12           of changes implemented in last year’s Budget, real estate assets
months as structural issues in the retail market generally start          bought between 2011 and 2014 can now be sold after a four-year
to concern some investors. Rental growth is likely to prove               hold period without incurring Capital Gains Tax (as opposed to
elusive in some retail schemes and locations unless they are              what was originally a seven-year hold period). This may result in
being actively asset managed.                                             some additional assets being released for sale in 2018,
                                                                          particularly those held by private investors. While there is likely
“Yields in Irish cities other than Dublin                                 to be further loan sale activity this year, the real estate assets
                                                                          within these portfolios are expected to be relatively granular
are priced even more attractively and we                                  compared to the loan portfolios traded in recent years.
expect to see investor appetite for prime                                 The profile of investors is likely to be broadly similar to those
                                                                          that dominated buying activity in 2017. European institutional
investment opportunities in cities such as
                                                                          investors are likely to be particularly acquisitive and we are
Cork, Limerick and Galway over the next                                   likely to see some new entrants investing in Ireland this year.
12 months”

Figure 2: Irish Investment Spend 2007 - 2017

          5000
          4500
          4000
          3500
          3000
Million

          2500
          2000
          1500
          1000
           500
             0
                   2007

                           2008

                                      2009

                                                  2010

                                                                            2012

                                                                                        2013

                                                                                                    2014

                                                                                                               2015

                                                                                                                           2016

                                                                                                                                       2017
                                                              2011

Source: CBRE Research

© 2018 CBRE U.C.                               IRELAND REAL ESTATE MARKET OUTLOOK 2018                                            CBRE RESEARCH

                                                                     27
I N V E STMENT OUTLOOK

Meanwhile, we expect to see more capital from Asia focussing                   years. However, interest rates in Europe are expected to remain
attention on the Irish market in 2018 with Korean investors                    stable in 2018, which bodes well for continued investment in the
likely to be targeting any core office investment opportunities                real estate sector over the course of the next 12 months. It would
that emerge.                                                                   appear that deploying capital will continue to be the biggest
                                                                               challenge for investors in the Irish market for the foreseeable

“The Build-to-Rent model offers defensive                                      future.

income characteristics, which is very
                                                                               “Interest rates in Europe are expected to
appealing to investors in the current
                                                                               remain stable in 2018, which bodes well
climate”
                                                                               for continued investment in the real
We are clearly approaching late cycle and will eventually see a
                                                                               estate sector over the course of the next
gradual unwinding of quantitative easing, which has been so                    12 months”
supportive of the real estate investment market over recent

    Acquisition of 13-18 City Quay office investment on behalf of Irish Life for in excess €125 million from Targeted Investment Opportunities

© 2018 CBRE U.C.                                     IRELAND REAL ESTATE MARKET OUTLOOK 2018                                             CBRE RESEARCH

                                                                          28
Sale of AIB Grafton Street for
  approx. €50 million on behalf of
  GLL

     Sale of Merchant’s Quay Shopping Centre, Cork to Clarendon           Acquisition of Honey Park, a Build to Rent (BTR) investment
     for €13.7 million                                                    opportunity at Dun Laoghaire, Co. Dublin on behalf of Patrizia
                                                                          for €132 million

                                                                              Forward-funding of No. 1 Dublin Landings office investment
                                                                              opportunity for more than €150 million on behalf of Ballymore
                                                                              and Oxley plc to an international investor

© 2018 CBRE U.C.                                  IRELAND REAL ESTATE MARKET OUTLOOK 2018                                       CBRE RESEARCH

                                                                    29
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