Ireland's commercial property market recovered strongly in the second quarter, according to data from estate agents Sherry FitzGerald.
Investment activity reached €523 million, up from a “very weak first quarter” in which investment turnover fell to a record low of €163 million.
Transaction volume also recovered, with 34 sales completed over the three-month period, the highest number since the third quarter of 2022.
Jean Behan, head of research at Shelley Fitzgerald, said the recovery was due to a broader improvement in economic conditions in the third quarter.
“The second quarter saw market sentiment strengthen as lower interest rates, an improving economic outlook and more favourable pricing created an environment for recovery,” she said.
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“This was highlighted by an increase in both investment volume and investment value coupled with an increase in large investments during the quarter.”
Retail remained the most active sector, accounting for 27% of capital expenditure, or €143 million. This was the highest quarterly level of retail spending recorded in the past two years, mainly reflecting the number of retail park transactions.
The biggest milestone was Corum's acquisition of Mahon Point Retail Park in Cork for an estimated €50 million. Two further retail parks in Letterkenny and Killarney also traded during the quarter for a total of €40.5 million.
Office assets accounted for 16% of quarterly sales, worth €81 million, which compares with capital expenditure of around €13 million in the first few months of the year.
The most notable transaction was State Street's sale of 40 Molesworth Street, Dublin 2 to Deca Immobilien for approximately €37.5 million.
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Residential assets also attracted investor spending of nearly €81 million in the three months, including the quarter's biggest deal of €70 million from the off-market sale of a major apartment development in north Dublin.
There was also new activity in the healthcare sector with transactions of around €77 million, including the sale and leaseback of a portfolio of three care homes in Portmarnock, Portlaoise and Kilkenny by Emeis Ireland to Healthcare Activos for €56.7 million.
Sherry Fitzgerald said there had been a notable change in the size of the deals being made, with the volume of deals in the €1 million to €10 million range falling significantly by 53%.
This compares to 80% in the previous quarter and is below the long-term quarterly average of 63%.
A further 21% were in the €10 million to €20 million range, well above the average rate of 12% for this group. Around 9% of the deals were valued at over €50 million.
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Ross Harris, director of commercial and residential investment at Sherry FitzGerald, said deal activity across the Irish investment market “should continue to recover” until the end of the year.
He said the renewed increase in significant transactions in the private rented sector was a “welcome development” and demonstrated institutional capital's continued focus on supporting Ireland's residential rental market.
“However, it is worth noting that the residential rent cap remains a significant issue for institutional investors looking to invest in Ireland,” he said.
“Looking ahead to the rest of the year, we expect investor confidence to continue to improve with at least one further interest rate cut.”
“A number of asset sales were agreed at the end of the quarter which should lead to improved activity levels in the second half of the year. However, full-year sales this year are unlikely to reach their long-term average.”