IRELAND SNAPSHOT - Colliers International
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IRELAND SNAPSHOT DECEMBER | 2019
2
ECONOMY
The Irish economy continues to outperform the G7 is volatile, the figure is in line with weaker business
average with the year-on-year rate of GDP growth confidence and well below the five-year quarterly
revised up in Q1 19 from 6.3% to 7.2%. Furthermore, average of 11.0% y/y. Unemployment in Q2 19 rose
December 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
the first official GDP estimate for Q2 19 exceeded by 16,400, the largest quarterly increase since Q2 10,
market expectations at 6.0% y/y. Nevertheless, with the unemployment rate up from 5% to 5.3% over
relentless Brexit uncertainty continued to weigh on the same period. The unemployment rate has been
business sentiment and GDP forecasts for H2 19 have stable at 5.3% throughout Q3 19. Low interest rates,
been reduced from around 2.7% to a 2.5% y/y rate coupled with weak sterling, have pushed Irish annual
(Oxford Economics). Likewise, the Irish composite inflation back up to 2013 levels. In May 2019, Irish CPI
purchasing manager index has shown a further reached 1.7%, but has since fallen back and was 0.7%
decline to 50.6, still expansionary, but the lowest in October, in line with the Eurozone average.
reading in 89 months. Fixed capital investment in
Building & Construction (a surrogate for the supply
side economy as a whole) fell from a 10.6% y/y rate in
Q1 19 to 6.0% in Q2 19. Although business investment
Colliers view: The Irish economy is stable, despite mixed messages. Ireland is forecast to outperform G7
economies, with an annualised growth rate of 2.3% pa in the next five years compared to
1.7% pa for the G7 as a whole.
INVESTMENT MARKETS
Total quarterly investment in Irish real estate across Hanover Quay, Dublin 2 for €197m at a yield of 4.1%.
all commercial and residential segments remained The property is fully let to DocuSign International
buoyant, with the Q3 19 quarterly volume topping and Aptiv Global with a WAULT of 12 years. Not far
€1.2bn for a second consecutive quarter. PRS behind was Greystar’s forward purchase of a 268
accounted for a large percentage (45%) of total unit PRS scheme for €176m with an estimated future
Irish commercial property investment with €555m yield 4.08%. The remaining large deals comprised a
transacted. Office investment amounted to another collection of office and PRS assets, including another
€464m, not including the office component of another PRS forward purchase (The Quarter in Citywest) by
€74m in mixed-use deals. The largest deal in Q3 19 Urbeo for €94m at a 4.4% yield. In total, eight deals
was Union Investment’s purchase of offices at Five over €50m were recorded in the quarter.
Retail: Retail sector activity was fairly subdued, with (43 units in 141,934 sq ft) in Ballincollig, Cork which
only €46m transacting in Q3 19. This follows a busy went under offer in Q2 19, is reported to have closed
end of 2018 and a busy Q1 19, with quarterly volumes in Q3 19 at €19m, below the €22m asking price, and
of around €200m. The largest deal in Q3 19 was the at a yield of 10%. Despite limited transactions, several
purchase by a European fund of a purpose-built Tesco shopping centres and other assets of scale are on the
(CPI linked with 10 years to first break option) in market. In total, some €303m of retail assets were
Gorey, Wexford with associated offices and stores for available on the market as of end Q3 19.
€20.75m at a 7.05% IY. Castlewest Shopping Centre
SELECTED RETAIL TRANSACTIONS VALUE YIELDS
Tesco - Wexford €20.75m 7.05%
Castlewest Shopping Centre - Cork €19m 10%4 5
Offices: Office transactions rebounded in value by Kennedy Wilson (US) at Half Moon Street in Cork
FIGURE 1: Highest forecast Lowest forecast
terms from €230m across 12 deals in Q2 19 to for €36.3m at 6.7% IY (2008 mixed use development
ANNUAL REAL 10%
€464m across 9 deals in Q3 19. Dublin remained the with asset management opportunities). At the end of GDP GROWTH
focus, given the sale of Five Hanover Quay and Nova Q3 19 there were 17 office assets valued at €147m on FORECAST RANGE 8%
Atria (€165m at 5.72% IY). Nevertheless, office-led the market.
deals were also concluded by Fine Grain Properties 6%
December 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
December 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
(Singapore/Irish) at Westpark, Shannon for €50m and
4%
Central Bank of Ireland
SELECTED OFFICE TRANSACTIONS VALUE YIELDS 2% “no-deal’ Scenario
Five Hanover Quay - Dublin €197m 4.1%
0%
Nova Atria - Dublin €165m 5.72% 2016 2017 2018 2019f 2020f 2021f
Half Moon Street - Cork €36.3m 6.7%
Sources: Central Bank of Ireland, ESRI Ireland, European Commission, IMF, Oxford Economics
FIGURE 2: Office Retail Industrial Other
Industrial: Irish industrial market transaction volumes Dublin was sold for €11.2m at 4.83% IY and an QUARTERLY
€2.5
remain limited by the availability of Grade A standing off market deal at Dublin Airport Logistics Park TRANSACTION
assets. €36.9m transacted in Q3 19. Two industrial exchanged at €18.5m. At the end of Q3 19, only nine VOLUMES, IN €BN
€2.0
deals in excess of €10m closed – Mygan Business assets, with a total guide price of €83.75m, were
Park (Units 4 & 5 leased to Nightline logistics) in reported as available on the market. €1.5
€1.0
SELECTED INDUSTRIAL TRANSACTIONS VALUE YIELDS
Mygan Business Park - Dublin €11.2m 4.83% €0.5
€0.0
Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
Source: Colliers International
Alternatives / Other: Outside the traditional office, Dublin, with a number of other deals off-market. Given
retail and industrial sectors, Q3 19 transactions housing dynamics, this trend is likely to continue. The
were dominated by PRS schemes, which included hotel sector continues to see movement, with two
12 developments valued at €555m. All of these are mid-sized traded in Q3 19, including the Central Hotel FIGURE 3: 2017 2018 2019
in the Greater Dublin area and have achieved yields in central Dublin, which was bought by a Deutsche INVESTMENT
€5
ranging from 4.08% to 7.16%. In addition to the 550 Finance/BCP Capital JV for €40m and the Glasson VOLUMES,
units that have been forward funded, there are roughly Country House Hotel and Golf Club in Athlone, which
CUMULATIVE, IN €BN
€4
500 units included in other deals that closed in Q3 was bought by Press Up Entertainment for €9m. The
19. As of the end of Q3 19, there are also another four smaller sub-€1m part of the market is stable, but €3
sites with 543 units on the open market, all within relatively quiet.
€2
SELECTED ALTERNATIVES/OTHER TRANSACTIONS VALUE YIELDS €1
PRS: Dublin Landings - Dublin €175.5m 4.08%
€0
PRS: The Quarter at Citywest - Dublin €94m 4.40%
Q1 Q2 Q3 Q4
PRS: The Circle Collection - Dublin €52m 6.40%
Source: Colliers International
Colliers view: The Irish property market is stable, with yields feeling pressure from steady investment
demand, especially from cross-border investors.7
OCCUPIER MARKETS
Retail Activity in the third quarter of 2019 has been similar requiring smaller spaces. Sluggish sales of the fashion
to Q2, with food retailers Supervalu, Lidl, Aldi, Dunnes sector, Brexit and the continuing growth of online
December 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
and Tesco leading the charge in seeking or opening retailing is a cause of concern to fashion retailers.
new stores. Homeware groups and discounters are The market is facing continuing store rationalisation
active on the comparison front, in particular, Jysk, at various retail groups, such as Carpetright, and at
Homesense and TK Maxx. Home Store and More, The fashion groups including Monsoon, Next, Schuh, Office,
Range and H&M Home have also expressed interest in Karen Millen (closed), Coast (closed) and Signet. It’s
new stores. Some of the bigger mainstream retailers worth noting that Debenhams has approached its
are keen to find stores in prime Dublin city centre Irish landlords looking to restructure its Irish leases
pitches in Grafton Street and Henry Street, but do and seeking substantial rent reductions. Some of the
have difficulty obtaining economic store space with leading fashion chains are exercising break options to
larger footprints of between 500 sq m and 1,000 sq reduce the number of branches or to exchange breaks
m required. In fashion, there are a few new entrants for lower rents.
seeking space, mainly exclusive high-end brands
Colliers view: Unchanged. Dublin city centre rents are stable and vacancy rates are limited. A number of
redevelopment projects are under way in the regional centres.
Offices Dublin’s office market recorded its best ever H1 take- there have been five deals at or in excess of 100,000
up figures, with 1.75 million sq ft transacted between sq ft. Prime quoting city centre rents vary from €60 to
January and June. Take-up in Q3 reached 400,000 €65 per sq ft per annum and have stabilised over the
sq ft, bringing the year-to-date figure to 2.15m sq past 12 months. Larger pre-lets tend to be negotiated
ft, only slightly below the corresponding figure for at lower rents (€57 to €62 per sq ft per annum),
2018. Occupational demand remains robust, with 40 indicating that landlords are willing to negotiate better
deals completing in Q3. Activity was characterised by terms to de-risk speculative developments. Rents
smaller deals and there were only two larger letting have effectively doubled in the city centre since 2013.
deals in excess of 50,000 sq ft, with no transactions Prime suburban rents remain steady at between €25
of more than 100,000 sq ft recorded. So far this year, to €32 per sq ft per annum.
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 The Dublin industrial market made a strong start to representing c.70% of all activity, with owner occupier
the year, with take-up of 186,000 sq m in H1 2019. sales representing just 30%. There were three leasing
Over the first six months of 2019, take-up was up deals in the 5,001 – 10,000 sq m category, two of
by over 50% compared to the same period in 2018. these on the Northwest Business Park, Ballycoolin.
Q3 take-up moderated to just over 50,000 sq m, as Joule let 8,612 sq m at Unit 407 and logistics operator
limited stock and Brexit related uncertainty impacted. McQuaid O’Flanagan let 6,484 sq m at Unit 200. Cork
Year to date Q3 2019, take-up is down c.7% on the has experienced respectable Q3 take-up of 5,900 sq
comparable period in 2018. By location, the North m, while Galway take-up accelerated in Q3 to just over
East and North West areas accounted for about 8,000 sq m, dominated by a 7,500 sq m letting to a
70% of take-up. Lettings dominated activity in Q3, US corporate at Mervue Business Park.
Colliers view: Rents across the board continue to escalate, with Dublin prime rents now at €106 per sq m,
Cork at €90 per sq m, Galway at €80 per sq m and Limerick at €70 per sq m.8 9
Hotel Overall transaction activity in Ireland’s hotel market in a move that will improve the hotel’s food and FIGURE 4: Grafton Street Henry Street Dundrum Shopping Centre
totalled €221m during the first nine months of the beverage offering. A number of larger hotels came PRIME RETAIL YIELDS
6%6
December 2019 | Ireland Snapshot
Research & Forecasting Report | Colliers International
December 2019 | Ireland Snapshot
November
Research & Forecasting Report | Colliers International
year, almost three times the corresponding 2018 onto the market in Q3. The Hendrick Hotel opened
figure of €79.3m. The largest deal in Q3 was the sale in July and is located in Dublin 7, just off Smithfield 5%5
of the three star Central Hotel on Dublin’s Exchequer Plaza on Hendrick Street, a neighbourhood that is
Street, which was acquired by a JV between London- famous for arts, film, theatre and craft. Elsewhere, the 4%4
based Deutsche Finance International and Dublin- 300-bedroom Marlin Hotel opened on Bow Lane East.
3%3
based BCP Capital for €40m. The asset received The hotel benefits from its proximity to Grafton Street
approval for significant structural modifications and shopping and Georges Street. The property was 2%2
an increase in the number of bedrooms from 70 to designed by architects Cantrell Crowley and built by
112. The new owners will also extend the Library McAleer and Rushe and it includes a co-working area, 1% 1
Bar on the first floor and install a new restaurant 24-hour gym and serves food and drinks.
0%0
Colliers view: With supply currently outstripping demand, Dublin’s RevPar is predicted to decline in 2020, Q2 2015
2015 Q2 2016
2016 Q2 2017
Q2 2017 Q2
Q2 2018
2018 Q2 2019
Q3
before a stabilisation is likely in 2021.
Source: Colliers International
FIGURE 5: Dublin All (ex-Dublin)
RESIDENTIAL PRICE
Residential House price growth in Ireland continued to cool Fingal recorded an increase of 1.5% y/y. Residential GROWTH
30%
in September, according to latest data from CSO. property prices outside of Dublin continued to
20%
Nationally, prices across all residential properties rose increase but, at 3.6% y/y, the rate of growth slowed
Per annum growth
just 1.1% in the year to September, down from 8.5% dramatically from 10.6% y/y a year ago and was the 10%
a year ago and the slowest increase since mid-2013. weakest since the start of 2014. The region with the
0%
The average rate of house price growth in 2019 is just largest increase in prices was Border, at 11.8% y/y,
2.9%, down from 10.3% in 2018 and 10.9% in 2017. while prices in the Mid-East were close to stagnation -10%
Dublin experienced a second successive monthly (0.2% y/y). Despite subdued house price growth,
decline in house prices, with the September reading activity remained strong. The number of property -20%
of -1.3% y/y representing the strongest decline in transactions reached 12,366 in Q3, a 20% increase
-30%
almost seven years. Dún Laoghaire-Rathdown saw a on the 10,295 transactions taking place in Q2. Monthly
10
12
14
16
15
18
19
13
17
11
particularly sharp drop in residential property prices transaction figures have averaged 3,600 year to date,
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(-6.8% y/y), while, on the other end of the scale, down only slightly from the 3,700 average in 2018.
Source: Central Statistical Office
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.FOR 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
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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