IRELAND SNAPSHOT - Colliers International
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IRELAND SNAPSHOT MARCH | 2020
2
ECONOMY
The Irish economy is stable but weakening in line with down on 8.3% in 2018, but outperforming other
other advanced economies. Intangibles (IP transfers) advanced economies. Unemployment in 2019 rose by
remain volatile clouding interpretation, but the less 14,900 but fell in December and January by a total
March 2020 | Ireland Snapshot
Research & Forecasting Report | Colliers International
volatile ‘real’ economy, as illustrated by building and 5,000, in line with PMI levels. The unemployment
construction sector, confirms this weakening trend. rate is stable averaging around 4.7% over the last six
Consumer spending growth is also slowing, but months. The financial environment remains supportive
consumer confidence bounced in October in response and imminent strong fiscal stimulus in the UK may
to the agreed UK / EU withdrawal deal. Business support Ireland through trade links. The key downside
confidence is also up, according to composite PMI risk may be domestic political uncertainty rather
data, which, after bottoming out at 50.6 in October, than UK/EU uncertainties and, in the short term, the
rose to 54.7 in January, consistent with moderately coronavirus and its growing impacts on European
strong growth. The latest February 2020 forecast trade, especially China’s role in feeding European
shows the Irish economy expanding by 5.4% in 2019, manufacturing supply chains.
Colliers view: Ireland is forecast to outperform G7 economies with an annualised growth rate of 2.0% pa in
the next five years compared to 1.6% pa for the G7 as a whole.
INVESTMENT MARKETS
The Irish property market had a stellar 2019, with market. Cross border investors remain active including
investment volumes rising to a record high of AM Alpha, Deka Quadoro Doric, Union Investment (all
€7.5bn for the year, helped by a very strong Q4. DE), Henderson Park (UK), Camgill (Canada), as well
Total quarterly investment in Irish real estate across as several private individuals. In 2019, cross border
all commercial and residential segments surged to investors accounted for over 70% of all Irish property
€4.2bn in Q4, three times the Q4 2018 figure. There investment. Institutional and private investors account
was a strong interest in “non-traditional” market for roughly 10%, respectively. Buoyant investment
segments. The PRS sector attracted a record-breaking demand continues to reflect ongoing search for yield
€1.1bn in Q4, while the Green REIT Sale to UK based by global and domestic funds. The yield gap between
Henderson Park for €1.34bn accounted for almost the All Segment yields and the risk-free rate (ten-year
entire mixed-use investment. Offices remained in high government bonds) has averaged 450 basis points
demand, with volumes doubling from €464m in Q3 over the last four quarters.
to €940m, a record for the Irish commercial property
Retail: Retail sector activity accelerated at the end Shopping Centre, also in Dublin, was sold to German
of the year, with quarterly investment volumes rising investor AM Alpha for €49.2m. The asset comprises
from a subdued €46m in Q3 19 to €315m in Q4 76 units, with a total floor space of 180,375 sq ft and
2019. The quarter takes the annual figure for 2019 to has a reported occupancy of 90%. Outside of Dublin,
€550m, which is 16% higher than the 2018 figure. Athlone’s Golden Island Shopping Centre was acquired
The sale of Dublin’s Stephen’s Green Shopping Centre by Davy Real Estate for €35m and a high-profile retail
to Davy Real Estate for €175.5m was the largest deal property (22,017 sq ft) was bought by UK Sports
in Q4 2019. The shopping centre was developed by Retailer Sports Direct on 113-115 Patrick Street & 2-5
British land in 1988 and has over 90 units with an Drawbridge Street in Cork for €6.2m.
overall floor area of around 320,000sq ft. Northside
SELECTED RETAIL TRANSACTIONS VALUE YIELDS
Stephen’s Green Shopping Centre €175.5m n/a Dublin
Northside Shopping Centre €49.2m n/a Dublin4 5
Offices: As mentioned above, office sector second-largest deal, Deka purchased ‘The Reflector’ highest forecast low forecast
FIGURE 1:
transactions doubled in value terms from €464m at Dublin’s Hanover Quay for €155m at 4.17% IY. The 10%
ANNUAL REAL
across 9 deals in Q3 19 to €943m across 13 deals in third-largest transaction was IPUT’s purchase of a GDP GROWTH 8%
Q4 2019. Over 2019 as a whole, the sector attracted 118,585 sq ft new building, No.3 Dublin Landings for FORECAST RANGE
€1.9bn, a 34% increase on the €1.4bn transacted €115m. There was only very limited interest outside of
6%
during 2018. Dublin remained the focus, the largest Dublin, although Cork and Galway each recorded one
March 2020 | Ireland Snapshot
Research & Forecasting Report | Colliers International
March 2020 | Ireland Snapshot
Research & Forecasting Report | Colliers International
deal being the sale of the Cedar Portfolio by Starwood transaction, worth €1.3m and €2.75m, respectively.
to US private equity firm Blackstone. In the quarter’s 4%
SELECTED OFFICE TRANSACTIONS VALUE YIELDS 2%
Cedar Portfolio €530m n/a Dublin
0%
The Reflector €155m 4.17% Dublin
2016 2017 2018 2019f 2020f 2021f
No.3 Dublin Landings €115m n/a Dublin
Sources: Central Bank of Ireland, ESRI Ireland, European Commission, IMF, Oxford Economics
Industrial: Irish industrial market transaction volumes extending to 213,373 sq. ft. was acquired by M7 Real
rose substantially in Q4 2019, reaching €200m. This Estate for €30.75m. A number of smaller transactions
was up from €37m in Q3 2019. By far the largest also took place. Dublin’s Naas Road Industrial Park Office Retail Industrial Other
deal was the sale of a Tesco Distribution Centre in was acquired by Development 8 for €8.9m at 4.25% FIGURE 2: €5.0
Donabate to South Korean investor KTB Investments IY. The six-unit asset comprises 87,174 sq ft of space QUARTERLY
& Securities and KTB Asset Management. The and two units are currently vacant. Also in Dublin, TRANSACTION €4.0
788,000sq ft warehouse was traded for €160m Burlington Real Estate purchased 11 Magna Business VOLUMES, IN €BN
and represents the largest single-asset logistics Park for €3.4m at 6.41% IY. The building provides €3.0
transaction to have taken place in the Irish market. 19,490 sq. ft. of warehouse space. At the end of Q4
€2.0
Elsewhere, the Project Compass Portfolio which 19, 14 assets, with a total guide price of €61.8m, were
comprised of four high quality industrial investments reported as available on the market.
€1.0
SELECTED INDUSTRIAL TRANSACTIONS VALUE YIELDS €0.0
Mygan Business Park €11.2m 4.83% Dublin Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Source: Colliers International
Alternatives / Other: Outside the traditional office, at Honeypark in Dun Laoghaire and at the Elmfield
retail and industrial sectors and the above mentioned scheme in Leopardstown. Elsewhere,90 units were
€1.34bn Green REIT sale, Q4 19 transactions were acquired by Real I.S. at Herbert Hill for €55m.
dominated by PRS schemes which included 21 Furthermore, DWS purchased Ireland’s largest off-
developments (including two off market transactions) campus student accommodation, the Point Campus
valued at €1.1bn.The large majority of these student accommodation portfolio (966 bedrooms) for FIGURE 3: 2017 2018 2019
transactions were in the Greater Dublin area and have €171m. The hotel sector continues to see movement INVESTMENT €7.5
VOLUMES,
achieved yields ranging from 3.38% to 7.64%. The with one hotel traded in Q4 19. A private Irish investor
CUMULATIVE, IN €BN
five largest PRS deals in Q4 were either off market bought the 160-bed MEC Hostel on North Great
or confidential transactions, led by the €216m sale George’s Street for €7.5m at 9.22% IY. €5.0
of Project Vert, comprising 382 rental apartments
SELECTED ALTERNATIVES/OTHER TRANSACTIONS VALUE YIELDS
€2.5
PRS: Project Vert €216m n/a Dun Laoghaire
Student: Point Campus portfolio €171m n/a Dublin
PRS: Herbert Hill €55m n/a Dublin
€0.0
Q1 Q2 Q3 Q4
Colliers view: Investment activity in the Irish property market reached a record-high in 2019 with yields
Source: Colliers International
feeling pressure from steady investment demand, especially from cross-border investors.7
OCCUPIER MARKETS
Retail The Irish retail market saw reasonable activity in 2019. rationalisations in Ireland. Earlier in 2019, Debenhams
In food, Lidl, Aldi and Tesco have continued to seek announced the intention to close 21 stores across the
March 2020 | Ireland Snapshot
Research & Forecasting Report | Colliers International
new stores as well as Dunnes and, even, M&S Food. UK and Patisserie Valerie went into administration,
Homeware groups and discounters are active on the which saw the closure of both Irish concessions
comparison front, in particular, Jysk, Homesense in Debenhams Henry Street and Blanchardstown.
and TK Maxx. Zara Home and H&M Home have also Swamp Clothing closed its six stores at the start
expressed interest in new stores. In fashion, there are of 2020 and Fallon & Bryne shut its store in Swan
a few new entrants seeking space, mainly exclusive Rathmines. The outbreak of Covid-19 poses a threat
high-end brands seeking smaller spaces. Some of the to the outlook, as travel restrictions are likely to result
bigger mainstream retailers are keen on prime Dublin in reduced footfall on the high street and in shopping
city centre pitches in Grafton Street and Henry Street centres. Furthermore, supply chains have been
but do have difficulty obtaining economic store space disrupted due to Chinese quarantine measures, with
with larger footprints of between 500 m² and 1000 some retailers unable to replace dwindling
m² required. We are faced with continuous store stock levels.
Colliers view: Unchanged. Dublin city centre rents are stable and vacancy rates are low. A number of
redevelopment projects are under way in the regional centres.
Offices Dublin’s office market take-up in Q4 reached 1.2 2 at the end of December. The deal will increase
million sq ft, bringing the year-to-date figure to 3.25 the company’s Dublin footprint to around 680,000
million sq ft, only slightly below the corresponding sq ft once the entire Wilton Park Development is
figure for 2018. Although the number of leasing deals completed. While Q3 was characterised by smaller
fell from 240 in 2018 to 200 in 2019, occupational sized deals no transactions of more than 100,000 sq
demand remains robust, with 60 deals completing in ft recorded, Q4 recorded three larger deals, bringing
Q4. Activity was characterised by pre-letting activity, the annual number of deals greater than 100,000 sq
accounting for almost two thirds of all take-up during ft to eight. The Technology, Media and Telecom (TMT)
the final quarter of 2019. There is also a considerable sector remains the dominant force in the Dublin office
carryover of transactional activity into Q1 2020, with market, accounting for roughly 60% of all leasing
around 1.3m sq ft of office space due to sign over activity in in 2019. A new wave of TMT companies,
the coming few months. For example, LinkedIn have such as Slack, Stripe, Intercom and Dropbox is
signed an extra 430,000 sq ft of offices in Dublin establishing large footprints in Dublin.
Colliers view: We believe that several large deals are likely to complete in the coming months, meaning that
annual take-up will again well exceed the 10-year average.
Industrial Dublin’s industrial market had a strong year-end, with in 2019, total take-up improved, as the average size of
Q4 take-up figures rising to 108,000 sq m, the highest transactions increased year-on-year. Almost half of
quarterly figure in four years. Annual total take-up all transactional activity was in the larger size band
reached 332,000 sq m, around 20% above the ten- (9,290 sq m 100,000 sq ft and above) while around
year average and an improvement on 2018 figures. Q4 20% of activity was for units up to 1,858 sq m or
leasing activity was focused on Dublin North (M2) and 20,000 sq ft. The largest transaction in 2019 was
Dublin South West (N7), each accounting for around DHL’s signing of a 23,300 sqm site on Naas Road and
one third of all Dublin industrial take-up. Lettings Nangor Road, followed by global logistics specialist
continued to dominate activity in Q4, representing Geodis taking of 17,200 sqm at Dublin Airport
nearly two thirds of all activity, with owner occupier Logistics Park. Geodis will initially pay an annual rent
sales representing just over 30%. Although the total of €1.6 million on a 20-year lease.
number of transactions fell from 178 in 2018 to 148
Colliers view: Demand for large units is expected to continue and, given the lack of supply of good quality
space, this will contribute to an increase in take-up of secondary space and design and build activity.8 9
Hotel Overall transaction activity in Ireland’s hotel market entered the Dublin hotel market in 2016, when it FIGURE 4: Grafton Street Henry Street Dundrum Shopping Centre
totalled €583m in 2019, up considerably from acquired the former Burlington Hotel in Dublin 4 for PRIME RETAIL YIELDS 6.0
March 2020 | Ireland Snapshot
Research & Forecasting Report | Colliers International
March 2020 | Ireland Snapshot
Research & Forecasting Report | Colliers International
the corresponding 2018 figure of €79.3m and the €182m. Other notable 2019 deals include the €116m
5.0
second-highest figure on record. While 2018 was sale of the Conrad Dublin to Dutch private equity firm
characterised by portfolio deals, 2019 was dominated Archer Capital and the €50m sale of Portmarnock 4.0
by larger individual sales in Dublin, with strong Hotel & Golf Links to Northland Properties (Canada).
3.0
interest from cross border investors. The largest deal The Dublin hotel market continues to be affected by
in 2019 was the sale of The Marker on Dublin’s Grand the reintroduction of the 13.5 per cent vat rate and 2.0
Canal Square to German investor Deka Immobilien weak sterling. Nonetheless, the number of overseas
1.0
for €134m. The hotel boasts 187 rooms, a spa, gym, visitors topped the 10 million mark for the second year
restaurants and a rooftop bar. The German fund in a row in 2019, rising by 1.8% ion 2018. 0.0
Colliers view: With supply currently outstripping demand, Dublin’s RevPar is predicted to decline in 2020, Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q3 2019
before a stabilisation is likely in 2021. Coronavirus-related travel restrictions may impact on overseas Source: Colliers International
visitor numbers.
Residential House price growth in Ireland continued to cool y/y. Residential property prices outside of Dublin
in December, according to latest data from CSO. continued to increase, but, at 2.8% y/y, the rate of
Nationally, prices across all residential properties growth slowed dramatically from 8.8% y/y a year ago
rose just 0.9% in the year to December, down from and was the weakest since the start of 2014. Despite
6.3% a year ago. House prices are still 17% below subdued house price growth, activity remained strong. FIGURE 5: Dublin All (ex-Dublin)
their 2007 peak. Dublin experienced a further decline The number of property transactions (including both RESIDENTIAL 30%
in residential properties, falling by 0.9% y/y. Dún new and existing dwellings) reached 54,219 in 2019, PRICE GROWTH
Laoghaire-Rathdown saw a particularly sharp drop very similar to the 2018 figure, but more than twice 20%
in house prices (-6.0% y/y), while, on the other end the figure recorded in 2013.
per annum growth
10%
of the scale, Border recorded an increase of 6.7
0%
Colliers view: Unchanged. House price activity and growth have slowed, with the latter linked to strict lending
rules and a gradual pick-up in supply. -10%
-20%
-30%
Jan 20
Jan 10
Jan 12
Jan 14
Jan 16
Jan 15
Jan 18
Jan 19
Jan 13
Jan 17
Jan 11
Source: Colliers InternationalFOR MORE INFORMATION
Declan Stone HOTELS AND LEISURE CONSULTANT
Managing Director
Weldon Mather
declan.stone@colliers.com
Consultant
+353 1 633 3732
weldon.mather@colliers.com
+353 86 868 4441
CAPITAL MARKETS
Michele McGarry ADVISORY SERVICES
Director
Emmett Page
michele.mcgarry@colliers.com
Director
+353 1 633 3738
emmett.page@colliers.com
+353 1 633 3725
BUSINESS SPACE
Nick Coveney RESIDENTIAL
Director
Marcus Magnier
nick.coveney@colliers.com
Director
+353 1 633 3736
marcus.magnier@colliers.com
+353 1 633 3785
Paul Finucane
Director
RESEARCH & FORECASTING
paul.finucane@colliers.com
+353 1 633 3724 Oliver Kolodseike
Associate Director
RETAIL oliver.kolodseike@colliers.com
+353 1 633 3700
Aiden McDonnell
Consultant
aiden.mcdonnell@colliers.com
+353 1 633 3722
Hambleden House
This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the
property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation 19-26 Pembroke Street Lower
to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other
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