Why Ireland is fast becoming the investor’s choice
Since the property crash in 2010, Ireland has been put through its paces trying to rebuild investor confidence and attract FDI. Now, eight years later, things are looking increasingly positive. Ireland has rekindled its fire and seems to be going from strength to economic strength. This in itself is not news; Ireland’s economy has been consistently among the best performing in Europe since 2015. What is interesting, however, is that we are starting to see a very clear structural shift in the type of property stock that is being sought.
High levels of demand fuelled by Brexit related foreign investment and a growing economy, alongside a backdrop of tightening monetary policy, have compressed yields to such an extent that investors are edging their way up the risk curve and starting to consider development opportunities, where previously investment in existing stock had been their preferred option.
Of all the asset classes, commercial property has provided the biggest cash injection into the Irish economy during the recovery period. In recent research from Cushman & Wakefield, they suggest that approximately €878.1m worth of office assets traded hands in 2017, accounting for 55% of total Irish investment turnover. It will be interesting to see how this trend continues as developers of work hard to match the high demand for office space.
Ultimately, if demand for office stock continues, it will pull other property classes with it. For instance, with the increasing job availability, residential space must be created to meet the growing number of professionals working in the city. A likely outcome is that private investors and developers will gradually move away from commercial spaces to begin focusing on creating residential accommodation for working professionals.
Whether or not Ireland’s continued growth is sustainable in the long term is a question that cannot yet be answered but with the European Commission’s expectation is that Ireland will record the highest growth in the EU this year, things are still looking positive. As demand for space in Ireland increases, especially in cities, it will be exciting to see how the country will continue to evolve under high pressure from domestic and international investors. Although investment opportunities are now increasingly competitive, we have still found that many exciting opportunities exist. In many ways competition in this area is to the benefit of Ireland, ensuring that only the best and most ambitious investors will remain.