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The IRISH Commercial Property Market Overview

The IRISH Commercial Property Market Overview. Marie Hunt, CBRE. June 20 th 2013. Agenda. The Occupier Markets The Office Market The Retail Market The Industrial Market The Investment Market The Hotels & Licensed Market The Development Land Market Loan Sales.

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The IRISH Commercial Property Market Overview

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  1. The IRISH Commercial Property Market Overview • Marie Hunt, CBRE • June 20th 2013

  2. Agenda • The Occupier Markets • The Office Market • The Retail Market • The Industrial Market • The Investment Market • The Hotels & Licensed Market • The Development Land Market • Loan Sales Presentation to PRAI– June 2013

  3. The Office Market • Growth in Dublin Office Stock Growth in Dublin Office Stock | 2004 - 2013 Source: CBRE, Q1 2013 Presentation to PRAI – June 2013

  4. The Office Market • Prime Rents | 56% Peak to Trough Decline Prime Dublin Office Rents | Q1 2000- Q1 2013 Source: CBRE, Q1 2013 Presentation to PRAI – June 2013

  5. The Office Market • Take-Up vs. Vacancy Dublin Annual Office Take-Up vs. Vacancy | 2004 – Q1 2013 Source: CBRE, Q1 2013 Presentation to PRAI – June 2013

  6. The Office Market • City Centre Office Vacancy Dublin City CBD Vacancy Rates | Q1 2013 Source: CBRE, Q1 2013 Presentation PRAI – June 2013

  7. CBRE Prime Rent Series Presentation to PRAI – June 2013

  8. The Office Market • Continued activity from existing occupiers and new entrants… • Overall level of demand robust…40 transactions signed in Q1… • Some rental growth emerging for prime although aggregate relatively stable… • Incentives starting to shrink… • Some improvement in the availability of funding …. • An increase in corporates buying premises… • An increase in refurbishment projects and pre-planning discussions although no speculative development anticipated for some time yet… • Continued gradual decline in the overall rate of vacancy… • Change of planning regime in Dublin Docklands… • Increased transparency due to new national database ?…. Presentation to PRAI– June 2013 Presentation to NTMA

  9. REGIONAL HIGH STREET VACANCY Presentation to PRAI– June 2013 Presentation to NTMA

  10. The Retail Market • Some improvement in this sector over recent months as consumer confidence starts to stabilise but conditions still challenging… • Vacancy levels a concern, particularly in provincial locations… • Good demand from existing retailers and new entrants although largely focussed on core locations…. • Greater focus on developing multi-channel offerings as online sales escalate… • Competition for the best pitches intensifying due to lack of new accommodation coming on stream… • Potential for some limited rental growth in key locations although aggregate remaining relatively flat…. • Rates now more topical than rents for many retailers… Presentation to PRAI– June 2013 Presentation to NTMA

  11. The Industrial Market • Strong demand from a range of specialist occupiers, particularly for prime buildings… • Greater incidence of occupiers purchasing premises, instead of renting… • A number of significant land sales in negotiation … • No speculative development anticipated other than ‘design & build’… • Rental values beginning to stabilise… • Pricing not the key driver of location decisions… • Short lease terms the norm….. • Multi-channel retailing boosting the demand for logistics and distribution facilities… Presentation PRAI– June 2013 Presentation to NTMA

  12. Irish Investment Spend 2006 – Q1 2013 Presentation to PRAI– June 2013 Presentation to NTMA

  13. Investment into Ireland 2012 Over €545m of transactions > €1m signed in 201235 transactions > €1m Presentation to PRAI – June 2013 Presentation to NTMA

  14. Analysis of Irish Investment Spend Q1 2013 Presentation to PRAI – June 2013 Presentation to NTMA

  15. IRISH TOTAL RETURNS & CAPITAL GROWTH Presentation to PRAI – June 2013

  16. CBRE Ireland Equivalent Yield Series • Prime Yields refer to an equivalent yield for a prime (well specified, well-located and rack-rented) property let to a strong tenant(s), on a lease with 10 years unexpired and open market rent reviews (upwards or downwards) • Prime Provincial refers to Cork, Galway, Limerick and Waterford only. Presentation PRAI – June 2013

  17. The Investment Market • Continued strong international appetite for prime investment opportunities and portfolios… • Domestic investors dominant but mainly for secondary and provincial opportunities… • Primary attraction is re-pricing from peak and the relative attractiveness of yields… • IPD series moving back into positive territory… • New sources of funding from overseas boosting liquidity… • Continued polarisation … • Potential for prime yields to harden further due to the weight of money… • Potential for secondary yields to soften further… • More loan sales activity anticipated … Presentation to PRAI – June 2013 Presentation to NTMA

  18. Irish Hotel Spend 2006 - 2013 Presentation to PRAI – June 2013 Presentation to NTMA

  19. Investment In Hotels Ireland 2012 Over €146m of hotel sales in 2012 in 24 transactions Presentation to PRAI – June 2013 Presentation to NTMA

  20. The Hotels & Licensed Market • More hotel and pub properties coming to the market… • Demand from international buyers primarily focussed on Dublin… • Domestic buyers focussed on provincial opportunities… • An increase in pub properties going into receivership and ultimately being released for sale… • Increase in refurbishment projects … • 2 new hotels opening in Dublin in 2013 but several hotel projects planned… • Demand focussed on properties in Dublin 1,2 and 4 and profitable hotels in Cork, Galway and Kilkenny… • Improvement in funding, both from domestic banks and overseas… • The Gathering 2013…. Presentation to PRAI – June 2013

  21. Development Land Sales 2008 – Q1 2013 Presentation to PRAI – June 2013

  22. The Development Land Market • Continued volume of both greenfield and brownfield land coming to the market … • An increase in owner-occupier demand … • Demand primarily local although some international investors buying sites… • Demand particularly strong for sites priced below €500,000… • An increase in the number of license and joint venture transactions • Strongest demand for: • Sites with planning for up to 50 houses in Dublin • Sites in good locations that suit discount retailers • Partially-complete residential developments in good locations • Sites in Dublin city centre that could accommodate student housing • Strategic sites that meet the requirements of corporate occupiers wanting to develop bespoke facilities Presentation to PRAI – June 2013 Presentation to NTMA

  23. Completed Loan Sales Ireland 2012 Presentation to PRAI – June 2013

  24. 2012 GloBAL Loan Sales Completed 37% of €9.79bn (Original Loan Value) in 2012 comprised Irish assets Approximately €836 million paid for Irish Loans in 2012 Presentation to PRAI – June 2013 Presentation to NTMA

  25. Loan Sales Ireland 2013 Presentation to PRAI – June 2013 Presentation to PRAI – June 2013

  26. Stages of a Property Market Cycle Source | Homer Hoyt – 100 Years of Land Values in Chicago

  27. Questions? • Marie Hunt • Executive Director, CBRE • Tel + 353 1 618 5543 • Email marie.hunt@cbre.com Presentation to PRAI – June 2013 Presentation to PRAI – June 2013 Presentation to NTMA

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