18% drop in corporate property investment in first quarter

May 3, 2023

Corporate property investment fell by 18% in the first quarter, as foreign investors paused their activity, new research has claimed.

In total, €625m was invested in the Irish market during the initial three months of the year, with US investor interest in the market here easing.

They injected €14.75m during between January and March, according to new data compiled by BNP Paribas Real Estate Ireland (BNPRE).

That compares to a 10-year quarterly average of €213m.

While German investors, traditionally the second largest source of investment capital, spent nothing during the first quarter, the first time in six years that this has happened.

“International investors remain confident in Ireland as an investment location, particularly because our demographic profile underpins strong demand for residential, logistics and certain forms of convenience retail property, including grocery stores and retail parks,” said John McCartney, BNPPRE’s Director of Research.

“However, rising interest rates have triggered a reassessment of property values and, in a small market like Ireland, it takes time for an evidence-base of transactions to bring vendors’ and buyers’ pricing expectations into alignment.”

Trading during the period was dominated by three €100m deals, the analysis said, with a continued focus on ‘defensive’ sectors.

Slowing rental growth and rising interest rates mean investment property values are now adjusting down, the research stated.

BNPRE said an adjustment in seller expectations will therefore be needed in order to re-start overseas investment.

“It is clear from our discussions with investors that Ireland remains an attractive investment proposition,” said Damien McCaffrey, Director of Investment at BNPPRE.

“However it is also evident from these conversations, and from the sharp rise in the domestic share of investment, that further pricing adjustment has a way to go.”

Article Source: 18% drop in corporate property investment in first quarter – Will Goodbody – RTE

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