Uncertainty stemming from global events will be the key aspect of the Irish property investment market in 2020. This is according to a report by Lisney, Ireland’s largest independently-owned property advisory company.
Despite this, Lisney expects investment market turnover to be strong in 2020, with several high-profile assets due to be put up for sale that will contribute to overall turnover levels. Lisney say this activity will be mainly driven by the office and PRS sectors, which will account for at least 70% of market turnover.
The property experts say this activity will follow a very strong 2019, where investment turnover is estimated at €4.7 billion, the largest amount of investment ever recorded in a year, and 18% more than 2018.
This €4.7bn does not include the company sale of Green REIT, which was an additional €1.34bn. Lot sizes increased further due to the sale of some large assets, averaging about €23m per transaction, with demand for the bigger opportunities coming mainly from overseas. Dublin accounted for 82% of investment turnover, followed by Cork at 5%.
In other sectors, Lisney expects residential prices to be relatively steady in 2020, with any growth in selected areas to be no more than 5%. They say new Near Zero Energy Buildings (NZEB) regulations will increase construction costs on residential properties by between 1% and 4%, while a trend in increased enquiries from UK based buyers for the upper end of the market is expected to continue into 2020.
On the office front, occupiers from the tech industry continue to dominate the market, taking half of all accommodation in 2019 and Lisney say this trend is set to continue into 2020. Elsewhere, nearly 6,000 student accommodation bed spaces are currently under construction across Dublin, Cork, Galway and Kildare while Cork’s top headline office rent, at €345 per square metre, is more than half the top Dublin rate.
Commenting on the year ahead, Lisney Research Director, Aoife Brennan said, "I believe the property market will remain active in 2020. The biggest threat to the various parts of the market is an external global event. The investment sector reached its highest turnover levels on record in 2019 and while we do not expect this to happen again this year, we do expect a very strong level of sales."
She added, "Occupier demand in the office market will remain busy and construction activity will continue, while in the industrial sector, further construction of larger buildings will address stock constraints. Development in the PRS and student accommodation sectors will assist with supply issues in the residential rental market."