According to analyst John McCartney, IRELAND’s most active international property investors are investing billions in ‘sheds and beds’, viewing apartments and logistics as safe ‘defensive posture’ bets.
Last year was the second busiest on record for overseas property investment here, with 5.5 billion euros spent: and, already, there’s another 1.5 billion euros of active in the market in early 2022.
“The year is shaping up to be busy with 1.5 billion euros of products on the market and a strong development pipeline of offices and apartments offering buying opportunities”, says Mr. McCartney, director of research at BNP Paribas Real Estate. He notes that one of the most significant recent changes has been the identity of the main buyers, with a second wave of European capital (particularly German) following the initial US post-crash attacks.
While US investors were the biggest buyers of Irish investment property in 2021, they have also moved through an investment cycle to become the biggest net sellers of Irish assets over the past five years. years. In 2022, American investors spent €1.34 billion on office buildings, logistics facilities and rental apartments: in the same year, they sold €720 million of Irish real estate. In five years, they have now sold €239 million more than they bought, becoming net sellers.
Also in net terms, Germany has become Ireland’s biggest buyer of investment property, deploying almost €4 billion in capital since 2017, according to BNP.
“Venture-based US private equity funds were the first to appear after the Irish economic crisis and were able to recover troubled assets, including office buildings, apartments and retail, at heavily discounted prices” , points out Mr. McCartney, adding that “these buyers are aiming for high returns and generally looking to exit their investments after five to seven years to recycle capital elsewhere.
German Institutions Now Make Up the “Second Wave” As the Irish economy stabilized, recovered, and then began to outperform, a different breed of institutional investors were attracted to Ireland. These buyers, including pension funds and REITs, have lower capital costs, are able to pay higher prices for stable rental income, and are here for the long haul.
The Irish market “is now experiencing significant inflows from French, Dutch and Swiss investors,” adds BNP.