Dublin, 26th January 2021 - Property consultants CBRE Ireland have today released figures for the volume of residential investment recorded in Ireland for the full year 2020, as part of their Residential Investment MarketView Q4 2020 report. According to the property consultants, €544 million of transactional activity was recorded in the Irish market during Q4 2020, bringing total investment in 2020 to just over €1.75 billion. While annual residential investment was down 27% on 2019, it represents a highly robust outturn given the challenging market conditions experienced in 2020.
- Q4 2020 saw a total of €544 million of transactions occurring in the Irish residential investment market, taking overall spend for the year to €1.75 billion. While annual residential investment was down 27% on 2019, it represents a highly robust outturn given the challenging market conditions experienced in 2020.
- The residential sector accounted for 43% of total commercial real estate investment in the Irish market in Q4 and comprised 48% of all investment for the full year 2020. This is the first year in which the residential sector has accounted for the largest percentage of commercial investment in Ireland, eclipsing both offices (37%) and industrial & logistics (7.5%). Residential investment accounted for just 33% of spend in 2019 while investment in offices comprised 51%.
- A total of 14 transactions completed in Q4 taking the total number of residential deals to 36 in 2020. This represented a 25% decrease on the 48 transactions completed in 2019.
- A total of six deals greater than €100 million completed during the year with two of these occurring in Q4. This was a marginal decrease on the seven that completed in the full year 2019. Another six transactions in the €50-€100 million bracket completed in 2020 with two of these in the final quarter of the year.
- The vast majority of activity in 2020 occurred in Dublin (97%+), with the south suburbs the dominant district for the second consecutive year accounting for 31% of all Dublin investment. Over 18% of 2020 transactional activity occurred in the north suburbs with 13% in Dublin 1/3/7.
- Forward-commit transactions accounted for 54% of spend in residential investment in 2020 – an increase on the 47% in 2019. Just 32% of the remaining deals comprised standing stock trades while 14% of transactions were undisclosed/confidential.
- Recent transactions, particularly forward-commit transactions, have seen existing owners adding to their holdings, bringing the total number of residential units under institutional ownership in Ireland to greater than 15,550 at the end of Q4.
- Prime yields for multifamily investment opportunities in the Irish market held firm at 3.75% through 2020. The sector displayed its much-vaunted defensive characteristics as rent collection and occupancy at mid-tier schemes in particular remained highly robust through 2020. The demand for ‘living’ product remains strong throughout Europe with Ireland seen as comparatively attractive given its strong long-term economic and demographic conditions. We expect yields to remain stable through 2021.
- There was some increase in vacancy at the very upper tier of the residential rental market in Dublin. This was understandable considering the volume of short-term let properties that became vacant as a result of a cessation of business and tourism travel last year and the number of city workers and students who relocated during lockdown. The suburban market fared much better with robust demand and strong leasing velocity at mid-tier schemes.
- With the multifamily sector having evolved from its embryonic stage in Ireland, we expect to see continued strong demand from investors for product in 2021.
- The other key trend to note is the emergence of demand from institutional investors for product leased on a long-term basis to local authorities or Approved Housing Bodies which is expected to attract keen pricing. We anticipate an increase in annuity income investors seeking opportunities to invest in social housing in 2021.
- Prime yields remained steady at 3.75% through 2020. Despite the challenging economic backdrop, the defensive characteristics of the residential sector, including robust rent collection and occupancy at many of the mid-tier multifamily schemes, saw pricing holding up. We have consistently maintained our guidance at 3.75% and stable through the pandemic. We anticipate that yields will remain steady through 2021.
- While Dublin rents fell in March and April at the onset of the pandemic, they have since rebounded to remain largely flat on a year-on-year basis. Government wage subsidies helped to support the rental market generally through 2020. Also worth noting is the professional profile of renters at core Dublin multifamily schemes, particularly in the suburbs, which make up a large cohort of units in institutional ownership, as this was another factor in 2020 rent price stability and will offer support to the market through 2021.
“A strong final quarter helped the residential investment market enjoy a highly robust 2020. With travel restrictions making it challenging for international investors to view product and conclude deals, the level of transactional activity in the Irish market remained strong. The multifamily sector continues to evolve in Ireland and the supply pipeline of product implies that this level of activity will be maintained into 2021. The demand from European and global investors for Irish residential investments remains strong with a number of large institutions circling the market. The rise of investment in state backed social housing product will be the key trend to watch out for in the coming year”.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 150 employees, we work with occupiers, investors and developers of office, industrial and logistics, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie