Irish Investment Market Showing Real Signs of Recovery

The Irish investment market has certainly had a lot of press coverage recently and everyone seems to be talking about it. Confidence has returned to the market and it is showing real depth in terms of demand, liquidity and supply. There have been a number of investors coming through our office doors in Dublin looking to hear about the recovery of markets, and how they can avail of the country’s economic recovery and perceived high returns. Everyone knows about the low corporate tax rate of 12.5%, but Ireland has much more to offer. It is the only native English-speaking Euro member, has a highly-skilled young workforce, an open economy, and is ranked as the best country in the world for doing business (Forbes). Increasing economic stability has also helped to improve sentiment and interest in the market, causing a significant uplift in investment activity in the last 12 months.

You don’t have to just take my word for it, if we look at the data; there is a very clear message of a nascent recovery. H1 2013 volumes (€612m) already exceed total volumes for the whole of 2012 (€557m) and we are forecasting that total volumes for the year-end will be between €1.2 – €1.5bn. This is a sustainable level for a market of Dublin’s size and is driven by investors focusing on large-scale prime office and residential buildings in core Dublin locations. This is where value increases are expected first, and with investors playing it relatively risk-free at the moment.

€6bn might sound like a lot of money, but this is the level of capital currently looking to invest in Ireland, 75% of which is from overseas. All the major global players are present including Kennedy Wilson (US / Canadian), Northwood Capital (US), King Street Capital (US), AM Alpha (German), CapREIT (Canadian), and Igal Ahouvi (Israeli). These are just a small sample of purchasers and they have been buying across all sectors of the market. We are starting to see the spectrum of interest widening further in the last 2 quarters, with interest from the Middle East and Asia and have also seen a return of domestic purchasers.

The news in July that Green Property was launching the first Irish REIT was met positively overall by the property sector and is expected to bring further liquidity to the market. The REIT, which was over-subscribed by €110m and saw commitment of €310m from investors, should be seen as a considerable endorsement of the Irish property market, particularly given that no properties have been purchased yet. Investors are essentially signing up to a ‘promise’, and obviously see significant recovery in Dublin’s markets in the short-medium term.

With so much interest in the market, my advice to investors looking to invest here would be to do it now because the market is showing real value and signs of a nascent recovery.