Commercial Property Investment Continues to Recover; RPZ Reforms Poised to Boost Residential Sector Investment

CBRE Ireland today confirmed that a total of €394 million was invested into Irish commercial property in the second quarter of 2025, taking total investment in the first half of the year to just over €940 million.

While below the 10-year average for the opening half of the year (which is €1.9 billion), there are clear signs that investment in commercial real estate is continuing to recover gradually from the lows of 2023 and 2024. With asset pricing now stable, interest rates down substantially following 200 basis points of cuts to the ECB deposit rate since June 2024, and more stability in occupational markets across sectors, real estate investors are more actively assessing opportunities in the Irish market with a greater deal of intent than in the last two years.

Although the total level of investment in Q2 was somewhat lower than historical averages, it would be a mistake to interpret this as being related to global macroeconomic and geopolitical instability. Real estate deal teams continue to be active and, in many cases, are looking through this uncertainty, as the market presents some attractive opportunities across sectors.

Encouragingly, the last quarter saw two prime Dublin office transactions complete at competitive pricing, with core European capital again returning to the Irish market. Meanwhile institutional investors continue to seek out retail assets, and for the second successive quarter, the largest transaction in the Irish market was a portfolio of retail parks. Several notable sale processes are also ongoing and should close in H2, specifically in the private rental and student accommodation sectors. This will further boost investment volumes in the second half of the year.

Notable Transactions

The largest office deal of the quarter saw Deka Immobilien continue its expansion in the Dublin office market by acquiring 20 Kildare Street from US institutional investor Kennedy Wilson. It was Deka’s second prime Dublin office acquisition in the last 18 months and demonstrates demand from investors for offices in the very core of Dublin 2. The second prime office transaction saw the Spanish family office, Pontegadea, acquire Ten Hanover Quay in the south Dublin docklands from Kennedy Wilson and NAMA.

While three of the top five deals in Q2 were in the office sector, the largest transaction of the quarter was the sale of a portfolio of retail parks for €123.5 million to U.S. REIT Realty Income Corporation. The portfolio, named the ‘Trinity Collection’, included Belgard Retail Park in Tallaght, Dublin 24; the M1 Retail Park in Drogheda, Co. Louth; and Poppyfield Retail Park in Clonmel, Co. Tipperary. The deal is the second large-scale retail park portfolio to transact in the Irish market in 2025, following the €220 million sale of a national portfolio by Oaktree Capital, again to Realty Income Corporation in Q1.

The high yields available on retail park investments, strong occupational market fundamentals, favourable debt terms, and a lack of new construction in the space to compete with existing stock, make the investment case for retail parks particularly attractive at present.

Breakdown by Sector

The office sector was the most invested sector in Q2, accounting for nearly 50% of capital deployed, while retail attracted 40% of all spend. In H1, retail remains the most invested sector, however, having attracted 46% of all spend.

Although investors around Europe remain hugely focused on the ‘living’ sectors, no institutional-grade residential transactions closed in the Irish market in the first half of the year. However, several notable sale processes are progressing well entering the second half of the year, which should offer a firm indication of pricing for PRS assets in the Dublin market.

Impact of RPZ Policy Change

The suggested modifications to rent control policy that were presented by the Department of Housing in a government press release on June 10th are welcomed by CBRE:

• The market has been waiting for an announcement regarding rent control policy change for a large portion of the year, and the delay has led to slower decision-making among stakeholders in the residential investment market. This announcement will give more certainty to decision-makers going forward, albeit we await further detail of the legislative change to be confirmed in July.

• CBRE continue to believe that further policy modification is needed to reignite construction in the private apartment sector. Specifically, we believe that a reduction in the rate of VAT payable on the sale of a newly completed apartment scheme would boost viability even more materially.

Kyle Rothwell, executive director & head of capital markets, said, “It was hugely positive to see two prime office transactions close this quarter in Dublin, attracting some of the most competitive core capital in Europe, which is a sure sign of confidence for the office investment market.”

Colin Richardson, director & head of research, said, “Some of the suggested changes to rent control policy outlined in June’s government press release are encouraging and should help to stimulate more investment in the Irish residential sector going forward. However, we believe that policymakers should now act to tackle the all-in costs associated with constructing private apartments. Some flexibility in tax measures appears to us to be the next step to improving construction viability.”