US investors flock to Irish property market despite falling investment volumes

Bisnow/Tim Clark

Irish investment volumes fell by 38% in the first quarter of 2022.

The Irish investment market saw a 38% decline in the first quarter of 2022 compared to the same period last year, although interest from abroad is intensifying.

Despite a general slump, the Irish market has started to attract American investors and large institutions, with American companies accounting for a third of all investments in the three months to the end of March.

Savills Ireland’s latest investment report revealed that a total of €761.5m was invested in the property market in the three months from January to March 2022. It also said that although volumes Investments were down significantly, still 9% above the long-term average of €700m for the quarter.

The sale of Irish REIT Hibernia to Brookfield and negotiations on the Salesforce campus are signs that investor sentiment has remained buoyant, with a total of 33 deals in Q1 and an average value of €23.1m. This compares to an average quarterly transaction level of 46 and an average value of €17.6m.

“This reflects a trend in the Irish investment market towards fewer sales but significant jumps in average deal value,” the Savills report notes. “The movement towards larger lot sizes stems from a greater concentration of institutional capital in the market, which requires investments of scale in order to deploy capital.

Multifamily remained the largest real estate sector for investment at 31% of total investment share. The industrial space took the second spot, with 23%, and student housing in third place, with 19% of investments volumes.

The investment in offices amounts to 10% of the investment volume.

In terms of volumes, the average deal size in the multifamily sector in the first quarter was €25.9m, 5.5% below the 10-year average of €27.4m, as less significant transactions have come to market. However, the nine multi-family deals completed during the quarter was the second highest quarter on record, trailing only the first quarter of 2021, when 13 deals took place.

Logistics sales also stood out in the first quarter, with the sale for €128.7 million of the Primark distribution center by Barola to Union Investment.

The best transaction in the office market was the sale of The Forum in Dublin 1 to Spear Street Capital by Hibernia for €30.8m.