A new report on Ireland’s property investment market reveals that almost €8.6bn has been invested in Irish office property since the start of 2013.
During this time over 1.4 million square metres of Dublin office space has traded – meaning that almost 40% of the city’s entire office stock has changed hands in recent years.
According to Savills’ Director of Research Dr. John McCartney, the investment market in Ireland has benefited from favourable monetary conditions with continuing low interest rates across the world driving capital into real estate. But the strength of investor interest in Dublin office property also reflects surging demand for business space due to a rapidly expanding and increasingly globalised domestic economy.
“By any international comparison Ireland’s rate of job creation has been exceptional in recent years, and 30% of all the jobs created last year were Dublin office-based positions. This has generated enormous demand for office space in the capital and, although new buildings are emerging, supply has been unable to keep pace. As a result the vacancy rate has been pushed to a 20 year low. Inevitably this underpins rents and values.”
Despite the strength of the investment case, Domhnaill O’Sullivan, Director of Investments at Savills, notes that Dublin offices remain good value by international standards;
“Net yields – which measure a property’s ability to generate rental income relative to the price that has to be paid to buy the property – remain higher in Dublin than in many other European capitals, and this is also attracting capital”.
Looking ahead, while acknowledging that the margin of error around macro-economic forecasts has been widened by factors such as Brexit and US / China trade tensions, Savills expects the market for income-producing office assets to remain strong.
According to McCartney;
“With a global shift from goods to services, Dublin’s position on the western edge of Europe is no longer a barrier to trade. Increasingly this, and other factors such as favourable demographics and the widespread use of English are attracting space-consuming technology companies to the city.“
The full report can be read here – http://pdf.euro.savills.co.uk/ireland-research/market-in-minutes/investments-report-2019-online-new.pdf