IRELAND SNAPSHOT - Colliers International
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IRELAND SNAPSHOT AUGUST | 2019
2
ECONOMY
The Irish economy continues to perform well, although UK (49.7), which is buffeted by uncertainty. Irish GDP
the rising pitch of Brexit discourse and uncertainty is is forecast to grow for the next five years, but the
undermining what would potentially be even stronger official rate will slow after distortions introduced in the
growth. In Q1 19, real GNP was growing at a 6.3% mid-teens by BEPS (base erosion and profit shifting)
Augsut 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
y/y rate with a steady contribution from personal fade. This is reflected in weaker fixed investment.
expenditure growth (2.9% y/y) and net export growth Likewise, net exports are forecast to slow due to a
(11.5% y/y). Ignoring recent volatility in IP transfers combination of disrupted global trading conditions,
and other intangibles, fixed investment in building weakness in China and the eurozone, and weaker
and construction (a surrogate for the real economy) sterling. Despite these worries, Ireland is forecast to
is steady at a 10.2% y/y rate, suggesting that Irish outperform the advanced economies (G7) with an
businesses have some resilience to Brexit uncertainty. annualised growth rate of 2.3% pa in the five year
This is also confirmed by June’s Irish composite period to end-2023, compared to 1.7% pa for the G7
purchasing manager index (54.4) suggesting that the as a whole.
short-term growth trajectory remains relatively strong,
ahead of the eurozone (52.2) and well ahead of the
Colliers view: Independent forecasters predict a slowdown in GDP growth to around 4% in 2019 and 3.2% in
2020. The Irish economy will hold up better than the eurozone and UK.
INVESTMENT MARKETS
Total quarterly investment in Irish real estate across commercial segments (offices, retail and industrial)
all commercial and residential segments more than fell by 40% from €462m in Q1 19 to €281m in Q2 19.
doubled from €0.6bn in Q1 19 to €1.2bn in Q2 19. Cross border investors remain active, including Union
This was led by a substantial quarterly surge of PRS/ Investment, Swiss Life, Henderson Park, LRC Group,
residential investment from €67.3m to €452m over DWS Investments and a handful of private individuals.
the same period. The largest deal was the IRES In the year-to-date, cross border investors continue
purchase of the XVI Portfolio from Marathon for to capture a steady share of around two-thirds of the
€285m, followed by Henderson Park and Chartered Irish property investment market by value.
Land’s purchase of Heuston South Quarter in Dublin
8 for €220m. In contrast, investment in the main
Retail: The retail sector was quiet, with only €39.3m Ballincollig, County Cork for €22m at 7.96% IY. At the
transacting in Q2 19, after two quarters with volumes end of Q2 19, there were 43 assets on the market with
at or near €200m. The largest standalone retail deal a total value of €395m.
was the sale of the Castlewest Shopping Centre in
SELECTED RETAIL TRANSACTIONS VALUE YIELDS
Castlewest Shopping Centre €22m 7.96% CorkAugust 2019 | Ireland Snapshot
3
Research & Forecasting Report | Colliers International4
Offices: Bartra Capital were active in Q2, acquiring number of assets across Dublin and the regions
two assets for a combined €126.25m in off-market in recent years, acquired J5 Plaza for €10.28m at
deals. They bought an 11 building portfolio, which also 6.53% IY, having traded at €6.5m in 2013, the vendor
includes development sites at Citywest for €105m was SW3. Appetite for office investment remains very
and also purchased five buildings and a development sound from both domestic and overseas investors.
site at Cork Airport Business Park (occupiers include The relatively subdued transaction levels reflect a
Augsut 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
Amazon and Red Hat) for €21.25m at 7.69% IY. The lack of stock, rather than a lack of interest. There
asset was acquired by a private investor for €15.1m are a number of significant deals, including the sale
in 2015. Elsewhere, the Lennox Building, currently of Green REIT, either under negotiation or at legals
under construction, was acquired by Swiss Life for which will greatly impact the level of turnover for the
€27m at 4.80% IY, the offices are occupied by Iconic second half of the year.
Offices. Finegrain Property, who have acquired a
SELECTED OFFICE TRANSACTIONS VALUE YIELDS
CityWest Portfolio, Dublin 24 €105m P&C
Lennox Building, Dublin 2 €27m 4.80%
5 buildings at Cork Airport Business Park €21.25m 7.69%
Corrig Court, Sandyford €12.3m 6.80%
Ballast House, Dublin 18 €26.9m 5.62%
PRS: In Q2 2019, a total of €559m was targeted located in Dublin, Cork and Galway, for €150m and
at the residential segment. IRES REIT acquired the DWS purchased the 214 Fairways apartments in
XVI portfolio from Marathon Asset Management for Dun Laoghaire for €108m. A number of large scale
€285m. The portfolio consists of 815 homes and is mixed-use schemes also changed hands in Q2, led by
distributed across 16 high-end developments. In two Henderson Park and Chartered Land’s purchase of
further €100m+ transactions, European property firm Heuston South Quarter in Dublin 8 for €220m.
LRC Group bought a 600 homes portfolio, mainly
SELECTED ALTERNATIVES/OTHER TRANSACTIONS VALUE YIELDS
PRS: XVI Portfolio €285m n/a
PRS: Heuston South Quarter €220m n/a
PRS: Fairways €108m 4.88%
Colliers view: H1 2019 investment volumes are in line with H1 2018, highlighting that investment demand for
Irish assets remains strong.
Industrial: The Irish industrial investment market is IY. At the end of Q2 19, only 14 assets were being
limited by availability of Grade A standing assets. In marketed, with a total guide price of €52.4m, the
Q2 19, there was only one industrial deal in excess largest of which is a portfolio valued at €14.2m. A
of €10m completed – a distribution unit let to Viking number of deals are close to being closed in Q3, such
Direct, with a break option in November 2020, which as “Project Star”, which is an off market transaction
was sold to a private investor for €10.5m at 6.53% worth €38m.
SELECTED INDUSTRIAL TRANSACTIONS VALUE YIELDS
Unit 1 Stadium Business Park €10.5m 6.53% Dublin 15
Cloverhill Ind. Estate (off market) €4.3m 7.00% Dublin5
FIGURE 1: Highest Forecast Lowest Forecast
ANNUAL REAL
GDP GROWTH 8%
FORECAST RANGE
6%
August 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
4%
2%
0%
2016 2017 2018 2019f 2020f
Sources: Central Bank of Ireland, ESRI Ireland, European Commission, Oxford Economics
FIGURE 2:
Office Retail Industrial Other
QUARTERLY
TRANSACTION
VOLUMES, IN €BN €2.5
€2.0
€1.5
billions
€1.0
€0.5
0
Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Source: Colliers International
FIGURE 3:
INVESTMENT 2017 2018 2019
VOLUMES, €5.0
CUMULATIVE, IN €BN
€4.0
€3.0
€2.0
€1.0
€0.0
Q1 Q2 Q3 Q4
Source: Colliers International6
OCCUPIER MARKETS
Retail The second quarter of 2019 is showing reasonable prime Dublin city centre pitches in Grafton Street and
activity, similar to Q1. In food, Lidl, Aldi and Tesco Henry Street, but have difficulty obtaining economic
have continued to seek new stores as well as Dunnes store space, with larger footprints of between 500 m²
Augsut 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
and M&S Food. Homeware groups and discounters and 1000 m². The continuing growth in online retailing
are active on the comparison front including Jysk, and the potential of disruptive tariffs resulting from
Homesense and TK Maxx. Zara Home and H&M Home Brexit is a cause of concern to retailers, particularly
have also expressed interest in new stores. In fashion, in the fashion sector. Retail sales growth is slowing.
there are a few new entrants seeking space, mainly Over Q2 as a whole, sales volumes were up 1.7% y/y,
exclusive high-end brands targeting smaller units. down from 2.9% y/y in Q1 and the fourth consecutive
Some of the bigger mainstream retailers are keen on weakening in the quarterly growth rate.
Colliers view: Unchanged. Dublin city centre rents are stable and vacancy rates remain low. A number of
redevelopment projects are under way in the regional centres.
Offices Dublin’s office market recorded its best ever H1 40% of the deals. Further, the demand profile shifted
take-up figures, with 1.75 million sq ft transacted back towards domestic occupiers, who accounted for
between January and June. However, there has been around 80% of leasing activity. Landlords continue
a dramatic slowdown in activity in the second quarter, to seek long term commitments on new space in the
with take-up slowing to 350,000 sq ft. This is well city. 25-year leases with first breaks at years 12 to
below the five-year average and sits in stark contrast 15 years are now the market norm for prime Grade A
to the 1.4 million sq ft of office space transacted in Q1. offices. Rent free incentives range from three to nine
However, occupational demand remains robust, with months, contradicting the requirements of new TMT
40 deals completing. Q2 2019 saw a much higher entrants, which has fuelled the explosion of flex space
proportion (62%) of leasing activity outside the CBD. operators.
In Q1, non-CBD transactions represented less than
Colliers view: Despite the take-up dip in Q2 there are a lot of deals at legals. Prime quoting rents have now
stabilised.
Industrial The Dublin industrial market made a strong start to the majority of leasing activity was for secondary
the year, with take-up rising from just under 90,000 grade space (71%). The AIB Ireland Manufacturing
sq m in Q1 to around 96,000 sq m in Q2. This PMI remained below the 50.0 mark for the second
represents a 12% quarterly increase. Over the first month running in July and, at 48.7, signalled the
six months of 2019, take-up was up by over 50% strongest deterioration in business conditions in over
compared to the same period in 2018. Quarterly six years. With demand conditions weakening, post-
take-up has now been at or above the series average production inventories rose at the strongest rate in
for four consecutive quarters. By location, the South the series history and there were explicit mentions
West and North West each accounted for over a third from panellists that UK demand had fallen as a
of activity, with the North East making up most of consequence of ongoing Brexit uncertainty.
the rest. Given a lack of available prime grade space,
Colliers view: Despite weakness in the manufacturing export sector, demand remains strong from a variety
of logistics operators and prime yields remain under downward pressure.
Hotel A number of larger hotels came onto the market in count up to 151. The hotel comes with a ground-floor
Q2. The five-star Marker Hotel at Dublin’s Grand Canal retail until currently occupied by Tesco, generating
Dock has a guide price of €125m and currently has annual rent of €225k. The Irish hotel market is
187 guest rooms. The hotel was first opened in 2013 currently facing several headwinds, including the
and comes with full planning permission for three VAT rise from 9% to 13.5% and the impact of weak
more stories that could accommodate an additional 60 sterling, both of which are adding cost pressures to
rooms, a new rooftop bar and brasserie. The three- operators. Revenue per available Room (RevPar) in
star Temple Bar Inn Hotel in Dublin 2 is guiding €45m Dublin decreased 1.4% in H1 and regional Ireland also
and has full planning permission for the addition of had a relatively slow start to the year.
over 50 bedrooms, which would bring the total room
Colliers view: Unchanged. A considerable pipeline of hotels in and around Dublin should go some way to
stabilising underlying demand.7
Residential Irish house price growth continues to cool, with price representing a 5% increase on the same period in
growth falling across all market segments. Nationally, 2018. However, new home sales, in fact, declined by
price growth has fallen from an 11.9% y/y rate in 4% y/y in Q2- the first such decline in over a year.
August 2019 | Ireland Snapshot
June 2018 to 2.0% y/y in June 2019. In Dublin, Monthly new home sales have now remained below
Research & Forecasting Report | Colliers International
residential property prices rose just 0.1% y/y, while the 1,000 mark for six consecutive months. New
prices ex-Dublin were up 3.9% y/y. The region with build development is gathering pace, with extensive
the strongest growth was Border (+14.7% y/y), while interest from investors in blocks and portfolios of
Dun Laoghaire-Rathdown saw a decline of 4.0% y/y. houses in and beyond Dublin. In 2018, 7,500 units
Residential property prices in Dublin remain 22.2% were completed in Dublin, up by over 30% on 2017,
below their pre-financial peak, while prices in the but short of the required build rate of 10,000+ units
Rest of Ireland are 21.3% lower. Transaction volumes per annum.
reached 12,332 in Q2 2019, up from 11,824 in Q1 and
Colliers view: House price activity and growth have slowed, with the latter linked to strict lending rules and a
gradual pick-up in supply.
FIGURE 4: Grafton Street Henry Street Dundrum Shopping Centre
PRIME RETAIL YIELDS
6
5
4
3
2
1
0
Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019
Source: Colliers International
FIGURE 5: Dublin All (ex-Dublin)
RESIDENTIAL PRICE 30%
GROWTH per annum growth
20%
10%
0%
-10%
-20%
-30%
11
13
14
15
16
17
18
19
10
12
n
n
n
n
n
n
n
n
n
n
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Source: Central Statistical OfficeFOR 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 RESEARCH & FORECASTING
Director
Oliver Kolodseike
nick.coveney@colliers.com
Associate Director
+353 1 633 3736
oliver.kolodseike@colliers.com
+353 1 633 3700
Paul Finucane
Director
RESIDENTIAL
paul.finucane@colliers.com
+353 1 633 3724 Marcus Magnier
Director
RETAIL marcus.magnier@colliers.com
+353 1 633 3785
Aiden McDonnell
Consultant
aiden.mcdonnell@colliers.com
+353 1 633 3722
This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the Hambleden House
property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation
to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other 19-26 Pembroke Street Lower
purposes. This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or
sell property.
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