Retail assets dominated investor appetite in 2016, bringing the investment market turnover to €4.5 billion over the year.
This is according to the latest research from agent BNP Paribas Real Estate Ireland. It says new risk-averse European, Middle Eastern and Far Eastern investors have entered the Irish, market while the weight of capital is focused on best-in-class "core" assets.
With 10 per cent of Dublin’s current office stock under construction or being refurbished, the research notes that the “active office supply pipeline is the key factor anchoring rents” which will grow at a more modest pace in future.
Prime office rents started 2016 at €592 per square metre and ended the year at €625-€630 per square metre – growth of 5-6 per cent. Some deals were signed at €645 per square metre “but not enough to clearly position rents at this level across all prime locations”, according to the agent, while the highest rent achieved in 2016 was the letting of 1,750sq m in the south docks to Zalando at just over €750 per square metre.
“All eyes will be on Molesworth Street and Hatch Street, where deals in these locations will set the upper limit for prime office rents,” according to the agent.
Strong take-up
Take-up in the Dublin office market during the last quarter of 2016 came in at 76,000sq m – a strong performance just short of the 78,000sq m achieved in Q4 2015.
Dublin’s retail parks market, meanwhile, is operating to capacity with vacancy rates at just 4 per cent across the capital’s main retail parks, “driven by no new supply and strong occupier demand”.
The research suggests the “logistics market is alive again” with take-up on track to “comfortably exceed” the 10-year average and signs of speculative development, “albeit limited”.
