2020 sees big finish to Irish property investment market as seasoned international investors commit
Q4 2020 saw a pick-up in investment turnover in Ireland’s property market, with EUR1.3 billion invested in income producing real estate assets across 44 separate transactions.
This brought year-to-date investment volumes to EUR3.0 billion - just ahead of the ten-year average of EUR2.9 billion. These are the primary findings of the latest Savills Ireland Investment Market in Minutes.
John Ring, Director of Research at Savills Ireland, says: “In the aftermath of the Global Financial Crisis, it was the uncertainty regarding the sustainability of Ireland’s government debt profile that resulted in commercial property yields spiking and prices falling. While continued monetary support from the European Central Bank means these issues are unlikely to come to the fore in the next year or two, the pandemic could bring some countries’ debt sustainability into question once again at some future point.
"As a result, global real estate investors will place even more importance on the macroeconomic stability of the country when deciding where to invest their money in 2021. In this context, Ireland’s relative economic stability during the pandemic period should help it attract further investment this year.”
Domhnaill O’Sullivan, Investment Director at Savills Ireland, says: “In an era of continued ultra-low interest rates, real estate is likely to retain its relative attractiveness as an asset class. With some investors believing that inflation risk is only going to increase through 2021, real assets such as property offer a good hedge against inflation while offering predicable cash flows with a generous yield spread over Government bonds.
"Ireland is well placed to attract real estate capital that will be deployed on a pan European basis this year, due to its robust relative economic performance through the pandemic.
"Given the fact that foreign buyers account for the majority of the investment flow, the market outlook for 2021 will be challenged by the practicalities of selling internationally. With a large spike in cases in early 2021, the Government has put the country into a full lockdown and these restrictions on mobility will dampen market activity in the first quarter of 2021. As efforts to inoculate the population progress at home and abroad, the freeing up of movement will allow for easier access to the Irish market for cross-border investors and be supportive of increased investment volumes.”