Ireland


Kelly O’Hara and Conor Houlihan of Dillon Eustace discuss the Irish market post-Brexit, and give an update on non-performing loans available in the region

What are the challenges and where are the opportunities in Irish real estate at the moment?

Kelly O’Hara: Our clients appear to have a broadly positive outlook for the Irish real estate market and we see plenty of demand for exposure to Irish real estate–both direct and indirect (for example, real estate finance) with particular emphasis on growth sectors such as healthcare and the hotel industry.

Office rents are continuing to grow and are now at €60 per square foot in Dublin’s prime business locations, which is just below the Celtic Tiger peak of €70 per square foot. There may be challenges in some non-prime retail in the short term, with considerable activity on the asset management side where new lettings, surrenders, lease re-gears, unit relocations and alterations are taking place to add value to many assets acquired via non-performing loan (NPL) sales. However, there are also opportunities for many retail investors, as leases completed during the recession face their first rent reviews in five years.

How will the UK’s exit from the EU affect Ireland?

O’Hara: Brexit may arguably be having a positive effect, as international real estate investors may be deterred by uncertainty in the London market. The Dublin office market enjoyed a strong start to 2017, with one of the largest deals in the first half of the year being the pre-purchase by J.P. Morgan of a 130,000-square foot block in Capital Dock in Dublin’s south docks, giving J.P. Morgan the potential to double its Irish workforce in response to Brexit.

It is too early to say whether any other large-scale relocations will take place, but there is considerable development activity in the market, particularly in Dublin, to increase supply, with nearly 40 percent of this pre-let.

What trends are Dillon Eustace noticing in the real estate market?

Conor Houlihan: The demand for Irish real estate is also underpinned by strong fundamentals. The Irish economy continues to grow and requires additional residential and office and commercial real estate. We are seeing a relatively more conservative and considered approach to transaction underwriting and commercial terms (compared to pre-crisis), which might also be slowing the pace at which the gap between supply and demand is narrowing.

A major driver of transaction levels over the past few years has been the significant deleveraging of real estate debt by Irish banks. A very high proportion of Irish commercial property assets have changed hands (and least once) in the past three to five years—either directly or via loan sales. Those original acquirers have since been exiting their investments, which often results in the real estate ending up in the hands of longer-term investors. It can be anticipated that this may result in reduced transaction volumes in future years.

Development financing is an area in which we see continued growth with a significant pipeline at margins and transaction terms (for example, long-term contracts) that are attractive to our lender clients.

O’Hara: The market is also witnessing new entrants with a particular focus on the development of student accommodation and large-scale buy-to-rent or develop-to-rent residential schemes, as Ireland is facing a significant shortage of residential stock in prime-city locations.

What are the challenges facing Europe’s NPL market?

Houlihan: In terms of the NPL market, Ireland has been one of the more active markets in recent years. Some further deleveraging can be expected, however we expect that the number of transactions will continue to reduce (although some larger transactions are still likely).

In the wider European NPL market we still see plenty of activity and, with recent European Central Bank guidance, accounting changes and other pressures, we expect that activity to continue. As a jurisdiction with a strong reputation (since before the financial crisis) for international debt repackaging, and as a firm with a particular expertise in this area, we are interested in the solutions that European banks will use (in particular securitisation technology) to resolve their NPL problems. As such, this is an area on which we are particularly focused at the moment.

Country profiles
The latest country profiles from Real Estate Investment Times
Kelly O’Hara and Conor Houlihan of Dillon Eustace discuss the Irish market post-Brexit, and give an update on non-performing loans available in the region
Between Brexit and post-crisis recovery, Frankfurt’s office sector is booming, with particular interest coming from the world’s financial institutions, according to Andreas Krone and Lenny Lemler of NAI apollo
Asset Servicing Times

Visit our sister site
for all the latest asset servicing news and analysis

assetservicingtimes.com
Africa has long been coveted as the land of real estate opportunity, but more needs to be done at a local level to break the market, heard attendees at the Second West African Real Estate Forum in London
Callum Young of Savills tells Mark Dugdale why South Korea’s real estate market is attracting both domestic and international attention
UBS Asset Management Global Real Estate has launched a new business initiative in Brazil, in partnership with Brazilian consultancy Real Estate Capital. Senior adviser Miose Politi explains
A member of the EU since 2007, Romania boasts a property market that has been on the up ever since. Liviu Tudor of the Romanian Association of Building Owners explains
Alternative allocations are becoming mainstream for institutional investors, and Canadian companies are leading the pack, says Claire Johnson of CIBC Mellon
Amid cross-border restrictions and tightened belts, Luxembourg’s kingdom of real estate investment won’t be crumbling any time soon
Features
The latest features from Real Estate Investment Times
Leo Civelli, CEO of Duff & Phelps Real Estate Advisory Group, discusses the effects of Brexit in the UK, further challenges facing the European markets, and the opportunities that lie in the non-performing loan space
The UK is coming to the end of a turbulent year for real estate, but Paresh Raja of MFS predicts a positive 2018 for those looking to expand their property portfolios
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
In the US, Regulation A has opened up doors for real estate companies and investors of all types, says Robert Kaplan of HC Government Realty Trust
International institutional investors want in on the private rented sector in the UK, says independent property expert Sam Collins
Alternatives continue to see rising demand from institutional investors in the Canadian marketplace. Tim Rourke, vice president of pensions and asset owners at CIBC Mellon, discusses how the country is well placed to meet it
Fund managers expect the private real estate industry to grow over the next three years, but Preqin’s Oliver Senchal warns against market consolidation
New regulations from the ECB have given real estate investors a lot to think about in the non-performing loans market, but appetite remains strong. Theo Andrew reports
Paul Conroy, real assets director at Aztec discusses the relationships behind co-investing and explains why it’s important to make sure it’s not just a marriage of convenience
Interviews
The latest interviews from Real Estate Investment Times