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Property Watch Q1’16 From Property Industry Ireland, the most influential property organisation in Ireland Inside this Issue: Over 2,000 residential commencements in the quarter, less than one-third in Dublin +19% QoQ; +50% QoQ in Dublin; Most agents report that prime office rents stabilised in Dublin in Q1’16 at around €592-€619 per m2 Office development activity surges ahead with around 35 building projects currently underway in Dublin city Dublin market accounted for the bulk of total commercial investment turnover in Q1’16 of c. €740 million AIB - A key player in the Irish real estate investment market The specialist real estate finance team in AIB, the Property Lending Unit, is actively involved in funding some of the largest and most complex real estate finance transactions on a variety of projects across the state. Special Report Ibec report sets out the impact of a possible Brexit on Irish business.
Introduction The aim of Property Watch is to bring together all of the
latest data on the Irish property sector and present it in
a clear and transparent way.
This edition of Property Watch – and all future editions –
will be sent to all TDs, Ministers and their advisors to
ensure that government policy and legislation in the
property sector is informed by the most accurate
Good data helps It is part of Property Industry Ireland’s mission to help
create a sustainable recovery in the property sector,
information from all possible sources.
people make better underpinned through sharing the best available evidence. Planning reform
One of the strengths of the Property Watch report is its
decisions Evidence-based housing policy
As Annette Hughes reports, the Programme for
ability to bring together leading indicators about future
housing output. Thus, it shows not only what happened
Government commits the Minister for Housing, in the property sector over the last quarter, but also
Planning and Local Government to produce a monthly plots what is likely to happen in the coming quarter.
report on the output of new housing. This regular
housing bulletin will be discussed at meetings of a new Planning permission data and commencement notices
cabinet sub-committee on housing, answerable to an should give a good sense of what the output of new
Oireachtas Committee on housing and homelessness. housing is likely to be in 2016. It will indicate what type
of housing will be delivered, where, and whether it is
We expect the government to produce an action plan part of a development or a one-off house. This will help
for housing within the first one hundred days of it taking avoid repeating past mistakes. However, with so many
office. The monthly housing bulletins are likely to be the delays and uncertainties within the planning system, it is
benchmark against which the delivery of this strategy not easy to determine when the houses will be built
is measured. These reports will indicate the types of and occupied.
financial, planning and public spending reforms which
are necessary to overcome the barriers to mobilising Planning permission data alone cannot fully illustrate
new housing supply. the delays which can take place during the pre-planning
stages of development. Nor does this data show the
It is important, therefore, that government has access huge range of procedures and practices which exist in
to as much market data as possible. individual planning authorities, and which determine the
time-lag between a new housing development becoming
The housing bulletin should be broad-based and should financially viable and building work proceeding. The
look at the state of the housing sector in its broadest Programme for Government commits the Minister to
context. As well as charting the supply of new homes, undertake a root and branch reform of the planning
data on transactions and rents is vital to understanding system, to remove unnecessary delays and provide
the underlying health of the sector. Past efforts to certainty to the planning system. As this reform
monitor housing supply have been limited because happens, the usefulness of planning data will improve. It
they used only information collected by State agencies will help improve transparency and extend the foresight
such as the Department of Environment, Community we have of future housing output.
and Local Government and the CSO.
Dr Peter Stafford
As Property Watch shows, private sector organisations Director, Property Industry Ireland
collect and publish a vast amount of additional information
which is vital to understanding the sector. This information
is available to policy-makers, and Property Industry
Ireland hopes that the new government will seek
the input of all perspectives and viewpoints when
undertaking policy reform.
2
Property There is general consensus amongst property agents
that the property market got off to a solid start in the
expected in a market lacking any signs of construction
activity for almost seven years until 2015. Moreover in
Overview
first quarter of the year. The sentiment expressed in the an economy which has expanded by almost 20% in
various reports is generally positive, particularly with that period and with employment up by close to
regard to the Dublin market. The main characteristics 160,000 from the lowest point in the last recession, it is
emerging are of a commercial property market which is inevitable that there would be a space requirement to
in recovery mode since 2015 after a prolonged period of accommodate that growth. This is particularly evident in
Strong economy and inactivity. In regard to housing, a key priority for the new
Government, we would be cautiously optimistic around
the Dublin office market where estimates suggest that
up to 35 building projects are currently underway in
the forthcoming Action Plan for Housing promised in its Dublin city. Although office construction remains
growth in employment first 100 days. Perhaps a coordinated effort from all
stakeholders, local authorities, housing agencies, the
limited in Cork and Limerick and there were no
commencements in Galway in the first quarter, the
are key drivers in
private and voluntary sectors may, once and for all, demand/supply imbalance prevalent in each county is
deliver a workable joined up solution to restore a likely to lead to a recovery in construction activity in the
properly functioning housing market. The challenge next 12 to 18 months. This will, of course, be subject
Q1 2016 (not insubstantial) will then be to implement the plan
as quickly as possible.
to developments being viable and the funding being in
place to progress schemes.
In the residential market, the new supply pipeline is Deleveraging continues as Nama works through its
improving, albeit from a low base. Dublin dominated on outstanding debt balances by bringing a number of its
a regional basis accounting for around one-third each remaining loan portfolios to the market. These include
of commencements, completions and transactions in the Project Ruby (€2.5bn par value) and Emerald
Q1’16. This share will need to increase significantly over (€2.2bn) portfolios, Project Abbey (€700 million) and
the coming quarters if the pent-up demand in the Project Tolka (€1.5 billion). These loan sales, when
Dublin area and the growth in employment is to completed by Nama, are expected to bring the
be accommodated. deleveraging process close to a conclusion in 2016.
The number of residential property transactions, On a positive note, the JLL Investment Intensity Index
however, was lower in the quarter, possibly a reflection for March 2016 included Dublin, in the number 15
of the inadequate supply on the market. The €900 position out of the top 20 most attractive investment
million in mortgage lending for house purchase in the destinations in relation to their economic size. These top
first quarter is well below what one would expect in a 20 “New World Cities” are expected to continue to
normal housing market. The average first-time buyer punch above their weight as real estate investment
mortgage rose YoY for the tenth successive quarter to destinations in 2016.
€177,722, while first-time buyers accounted for less
than half of the number and value of drawdowns in the There are downside risks which can adversely impact
quarter. The forthcoming review of the Central Bank a recovery in the property cycle, including global
rules over the summer may see less activity from economic concerns, the pressing issue of a Brexit
first-time buyers over the coming months as they (discussed by Ibec in our special report) and domestic
adopt a wait and see attitude. issues in regard to political and economic uncertainty.
While the underlying Irish economic recovery remains
The one common thread across the commercial broad based, such external forces, which are beyond
property sectors is the growing scarcity of Grade A our control, may well will hold back growth this year,
Annette Hughes space in sought after locations, which is putting rents according to Ibec, which could in turn delay property
Director, DKM Economic Consultants under pressure. This is probably what would be investment decisions.
3
Latest The new Programme for Government extends to 156
pages, 12 of which set out their ambitious plans for
Transfer more powers to local authorities, including
for the design of social housing.
News
housing. The phrase “we will” appears 55 times on
those 12 pages. Moreover, there are 12 actions to be Develop a “cost rental” option for low income families
done in the first 100 days and 25 in the first year. and increase the number of cost rental units available.
Nothing is left out, as the plan aims to address the
housing shortage, the delivery of social housing, Overhaul the terms of the Tenant Purchase Scheme.
homelessness, the rights of tenants and landlords in
Ambitious policy the private rented sector as well as planning reform.
Interestingly, there is also a section which aims to
Develop a new ‘Help to Build’ funding scheme for the
development of affordable housing in the private sector.
agenda for housing promote and protect home ownership, an area which
was noticeably absent in the last Government’s Housing
Policy Statement in 2011. It recognised that home
Explore the option of incentivising developers to
build and lease back homes to housing authorities
ownership is the tenure which people ultimately aspire and associations.
to, but acknowledged the costs and consequences of
encouraging people to choose their housing options on Introduce a new €100 million Local Infrastructure
the basis of investment and yield, mistakes which are Housing Fund for local authorities to unlock
still being felt by households across Ireland. Perhaps it development land in high demand areas.
is true that time is a great healer.
Support NAMA’s plan to work with and fund
The main measures in the new programme are developers to deliver 20,000 residential units before
summarised below. the end of 2020 and sooner if possible.
1: Leadership on housing Use the projected post-2018 NAMA surplus to
Within 100 days of taking office, the Taoiseach will fund infrastructure, including affordable
appoint a Cabinet Minister for Housing, who in housing programmes.
conjunction with the new Oireachtas Committee
on Housing and Homelessness, will draft and publish New Oireachtas Committee on Housing to examine
a new Action Plan for Housing. tax relief proposals designed to encourage a greater
supply of private rented accommodation
Local authorities, housing agencies and the voluntary
sector shall be expected to contribute to the drafting Ask the Oireachtas to consider a temporary targeted
of the Action Plan, which will be subject to targets reduction of the rate of VAT from 13.5 per cent to 9
and Cabinet review. per cent on new, affordable houses and apartments,
both public and private.
2: Improving housing supply
Accelerate the delivery of the €3.8 billion committed Support the efforts of credit unions in the development
to social housing, to ensure the targets of delivering of new housing.
18,000 additional housing units by the end of 2017,
and an additional 17,000 housing units by the end Expand the existing targeted development contribution
of 2020 are met. rebate scheme in Dublin and Cork to other areas
suffering a housing shortage.
Increase Rent Supplement and Housing Assistance
Payment (HAP) limits by up to 15%. Monitor and benchmark the use by local authorities
of the new “Vacant Site Levy”, which comes into
Exchequer funding for local authorities for returning effect in 2018.
more vacant units to use will be linked with their
performance in estate management and the statistics
they regularly publish on same.
4
3: Preventing and tackling homelessness Request the Central Bank to consider a ‘capacity
End the use of long-term emergency accommodation, to pay’ test for first-time buyer tenants, based on
such as hotels and B&Bs, for homeless families by, rent paid over a five year period to be set of against
in part, delivering 500 rapid-delivery housing units. the current deposit rules.
Expand access to the Tenancy Sustainment Protocol Retain mortgage interest relief beyond the current
throughout the country. end date of December 2017.
End the need for rough sleeping by providing a high Establish a new code of conduct for switching
level of funding for homeless services. mortgage provider and amend the Code of Conduct
on Mortgage Arrears to ensure providers of mortgage
Maintain the rent limits available under the HAP credit provide a range of sustainable arrears solutions.
Homeless Pilot to 50% above the rent supplement levels.
Provide greater protection for mortgage holders,
4: Planning reforms tenants and SMEs whose loans have been transferred
Introduce a similar scheme to the ‘Living City Initiative’ to non-regulated entities.
to regenerate town centres and villages.
Support the Central Bank’s regulation of negative
Establish a national register of derelict sites, in equity mortgage products which allows homeowners
addition to the new vacant site levy. to move house while still in negative equity.
Propose a new Rural Resettlement Scheme to
promote the advantages of rural living.
Promote higher urban densities in terms of housing
design, particularly along public transport corridors.
Commission an audit of land holdings by State bodies
and local authorities that might be used for housing.
Consult on possible amendments to the planning
guidelines to support purpose built student
accommodation and retirement villages.
5: Protecting and Promoting Tenancy
Rights and Home Ownership
Work with the Central Bank to develop a new “Help
to Buy” scheme to ensure availability of adequate,
affordable mortgage finance or mortgage insurance
for first time buyers.
5
Economic After a remarkable year for the economy last year, 2016
looks a lot more uncertain. In 2015, economic growth
Other external risks include growing uncertainty in the
wider global economy. In the past, Ireland’s economy
Outlook
surpassed all expectations as GDP grew by 7.8 per cent moved in unison with global growth. A slowdown in
- the fastest rate in 15 years. This was accompanied China and other major economies are symptoms of
by strong employment growth of 2.6 per cent creating further global uncertainty that could affect Ireland
50,000 additional jobs. A strong recovery in the indirectly. On the domestic side, strong growth and
consumer economy meant that consumption was up a rapidly increasing population are putting severe
3.5 per cent on the previous year. Early indicators for pressure on the country’s infrastructure and public
A number of external 2016, including retail sales and unemployment, suggest
that this positive momentum has continued so far this
services. Under the current EU fiscal rules, our ability
to invest in these much needed areas is constrained,
risks are expected to year. However, there are still many external risks facing
the Irish economy that could hinder growth. As a result,
despite the fact that borrowing costs are at an all-time
low. The new government should negotiate a more
hinder growth in 2016 Ibec’s forecast of 4.6 per cent GDP growth this year
comes with appropriate caution.
flexible approach to dealing with the fiscal rules, one
that distinguishes between capital expenditure and
running costs.
This growth forecast, while still the highest expected
for any European country, is lower than in 2015 for two While growth is expected to be lower this year, it is not
main reasons. Firstly, strong growth last year was due to an underlying weakness in the Irish economy.
primarily due to three external factors; low oil prices, Last year external factors played a key role in driving
interest rates and favourable exchange rates for Irish growth. This year however, these external forces
exporters. While two of these factors (oil prices and which are beyond our control won’t bring the same
interest rates) are unlikely to go against Ireland in the advantages and will hold back growth.
coming months, their boost to GDP won’t be as strong
as it was last year. Growing uncertainty in the global
economy also has the potential to hurt growth in 2016.
So far this year, exchange rates have moved against
Irish exporters. This is due to growing uncertainty
surrounding a potential Brexit. Last December, one euro
bought 70p but now it will buy 80p. This is bad news for
Irish exporters as in the space of four months Irish
goods have become 14 per cent more expensive. What
will happen to this rate in the coming months depends
on the outcome of the referendum. If the UK votes to
stay in the EU, it is likely that the exchange rates will
be more favourable for Irish exporters. However, if the
UK votes to leave, the euro/sterling exchange rate could
move to parity. This would make Irish firms exporting to
the UK 30 per cent less competitive and would have a
negative impact on exports and thus growth this year.
6
Irish GNP and Components
Annual YoY percentage change
2015 2016(E) 2017(F)
Consumer spending 3.5 4.1 3.8
Government spending -0.8 -0.9 1.2
Investment 28.1 11.4 5.9
Exports 13.8 9.3 5.1
Imports 16.3 9.4 5.4
GDP (Volume) 7.8 4.6 3.9
GNP (Volume) 5.6 4.0 4.2
GDP (Value) 13.5 5.4 4.7
Source: CSO, Ibec Forecasts. E = Estimate. F = Forecast.
GDP Growth Prospects for International Economies
Annual YoY percentage change
Real GDP Inflation
2015 2016(E) 2017(F) 2015 2016(E) 2017(F)
Eurozone 1.6 1.5 1.6 2.8 2.8 3.0
UK 2.2 1.9 2.2 0.1 0.8 1.9
USA 2.4 2.4 2.5 0.1 0.8 1.5
Emerging Markets 4.0 4.1 4.6 4.7 4.5 4.2
World 3.1 3.2 3.5 2.8 2.8 3.0
Source: IMF. E = Estimate. F = Forecast.
7Residential The supply pipeline for the Irish residential market
receded in Q1 2016 following a strong final quarter
The trend in the value of loan approvals in Q1’16
reflected the volumes outlined above with YoY and
Market
to 2015. Over 3,000 residential units were granted QoQ declines, leading to just over €1.1 billion in loan
planning permission in the first quarter of the year. This approvals. House purchase loan approval values fell
represented a 23% QoQ decline and was mainly driven by over 16% on both YoY and QoQ bases. Top-up/
by a 56% QoQ reduction in the number of apartment re-mortgage loan approval values also declined at a
Activity
units granted planning permission. Houses granted significant QoQ rate of 29%, but did increase by
planning permission also fell, but by a less significant almost a quarter YoY.
rate of 8% QoQ. On a YoY basis, planning permissions
granted for residential units fell by 4%. This was solely The mortgage market recorded a dip in Q1’16, but this
driven by the decline in apartment units granted is traditionally the weakest quarter of the year. The
planning as this sector recorded a decline of 20%. number of mortgage drawdowns fell by 3% YoY to less
Welcome recovery Houses granted planning permission increased YoY
but at a meagre rate of 1%.
than 5,500, and this yearly decline was partly the result
of the exceptionally high levels of drawdowns in Q1’15.
in commencements The eventual feed through of permissions to commen-
By segment, this YoY reduction was solely driven by a
decline in house purchase mortgages of 9%, though
in first quarter while cements was relatively strong in Q1’16 with over 2,000
residential units commenced in the quarter, an
drawdowns for top-ups/re-mortgages increased by
59% in the year to over 780 in Q1’16. On a quarterly
mortgage drawdowns increase of 57% YoY. Of this, 800 commencements
were one-off units. Registrations rose at a similarly
basis, the total volume of drawdowns declined by a
third, with reductions of 32% and 34% in house
fall by one-third strong YoY rate of 60% in Q1’16 to exceed 1,200, with
the strongest expansion recorded in March 2016.
purchase mortgages and top-ups/re-mortgages
respectively.
Completions—which conclude the residential supply
chain—dropped by a quarterly rate of 16% in Q1’16 In value terms, total drawdowns actually increased by
to less than 3,200, but remained 20% above the same 3% YoY in Q1’16 on the back of the aforementioned
quarter in 2015. Based on current trends, the total level growth in top-ups/re-mortgages. This segment of the
of housebuilding is forecast at 11,000 units in 2016. market expanded by 64% YoY, and more than made
up for a 2% YoY decline in the total value of house
Transactions recorded on the Property Price Register purchase mortgages. The total value of drawdowns fell
totalled over 8,800 in Q1’16, 26% below Q4’15 and on a quarterly basis. The value declined by a cumulative
down 13% YoY. 2015 was a strong year for residential 30% QoQ to just over €1 billion in mortgage drawdowns
transactions with over 44,000 occurring across the year, in the quarter. Focussing on the FTB segment of the
so such a relative dip in 2016 may have been expected. market, the average mortgage drawdown maintained its
upward trajectory to exceed €177,000, the highest level
Loan approval volumes fell in Q1’16 following a strong recorded since the second quarter of 2011. This
year in 2015. Over 5,800 loans were approved in the reflected a 7% YoY increase and a rise of 4% QoQ.
first quarter but this represented a YoY decline of 14%
and a larger QoQ fall of 18%. Lower numbers of house Dublin dominated on a regional basis accounting for
purchase loans were the main cause of these declines, around one-third each of commencements, completions
registering a decline of 17% YoY. Top-up/re-mortgage and transactions in Q1’16. This share will need to
loan approvals recorded some positive news with a YoY increase further over the coming quarters if the
rise of 20%, but the 738 loans approved in Q1 were pent-up demand in the Dublin area and the growth in
26% below the previous quarter. employment is to be accommodated.
8Residential Market Activity
Q3’15 Q4’15 Q1’16 QoQ YoY Loan Approvals Q3’15 Q4’15 Q1’16 QoQ YoY
Units Granted Planning 2,704 4,017 3,091 -23% -4% Total Number of Loan Approvals 7,965 7,124 5,831 -18% -14%
- Houses 2,345 2,754 2,534 -8% +1% - House Purchase 6,980 6,131 5,093 -17% -17%
- Apartments 359 1,263 557 -56% -20% - Top-Ups/Re-mortgages 985 993 738 -26% +20%
Total Loan Approval €m €1,465 €1,345 €1,108 -18% -14%
Commencements 2,706 1,742 2,081 +19% +57% - House Purchase €m €1,338 €1,189 €998 -16% -17%
of which one-offs 899 765 800 +5% +27% - Top-Ups/Re-mortgages €m €128 €156 €111 -29% +24%
Registrations* 1,492 859 1,263 +47% +60% Mortgage Drawdowns
Total Number of Drawdowns 7,305 8,090 5,446 -33% -3%
Completions** 3,289 3,752 3,144 -16% +20% - House Purchase 6,491 6,901 4,664 -32% -9%
- Top-Ups/Re-mortgages 814 1,189 782 -34% +59%
Transactions*** 11,557 12,065 8,879 -26% -13% Total Drawdowns €m €1,327 €1,439 €1,008 -30% +3%
- House Purchase €m €1,225 €1,273 €903 -29% -2%
National Housing Stock (000s) 1,997 1,997 2,001 0% 0% - Top-Ups/Re-mortgages €m €102 €166 €105 -37% +64%
FTB Drawdown - Average €171,993 €170,414 €177,722 +4% +7%
Regional Commencements Q1’16 Regional Completions Q1’16 Regional Transactions Q1’16
800 4,000
700 3,500
600 1,200 3,000
500 1,000 2,500
400 800 2,000
300 600 1,500
200 400 1,000
100 200 500
0 0 0
Border
West
Midlands
MidEast
Dublin
SouthEast
SouthWest
MidWest
Border
West
Midlands
MidEast
Dublin
SouthEast
SouthWest
MidWest
Border
West
Midlands
MidEast
Dublin
SouthEast
SouthWest
MidWest
Source: www.environ.ie Source: www.environ.ie Source: www.propertypriceregister.ie
*Mid-West includes all of Tipperary. *Mid-West includes all of Tipperary.
*Registrations refer to the number of units registered with Home Bond and Premier Guarantee. **Completions are measured as connections to ESB. *** Transactions data excludes properties that are not full market price and those under €20,000 and over
€5 million. QoQ refers to the latest quarter on quarter percentage change (Q1 on Q4). YoY refers to the latest year on year percentage change (Q1 2016 on Q1 2015). Loan Approval and Mortgage drawdown data from www.bpfi.ie.
9Residential Residential property prices across Ireland recorded
low growth and in some instances deflation in the first
With regards to sold prices, YoY growth of 10% was
recorded for transactions nationally on the Property
Property
quarter of 2016. Asking prices, as recorded by Daft.ie Price Register in Q1’16 (non- mix adjusted). This was
and MyHome.ie, showed modest QoQ growth in Q1’16 reflective of growth rates in excess of 9% both in Dublin
in Dublin and across the country. Asking prices and around the rest of the country. Using mix-adjusted
nationally grew by 3% QoQ according to Daft.ie. This sold prices, Daft.ie showed that Q1’16 was a quarter in
Prices
was driven by more robust QoQ growth outside Dublin which prices grew at a stronger rate of 3% QoQ in
of 4%, with asking prices rising at a lower rate of 2% Dublin, but declined in the rest of the country by 1%, to
QoQ in the Capital. Daft.ie’s YoY figures paint a give a cumulative national QoQ price increase of 1%.
somewhat different picture as Dublin prices had only The YoY growth rates were slightly different with Daft.ie
grown by 1%, but prices outside of the Capital had showing growth of 4% in Dublin and 13% in the rest
lifted by a substantially larger proportion of 10% YoY. of the country, contributing to a national house price
Modest growth in These figures contributed to a YoY national increase in
asking prices of 6%. MyHome.ie reported that Dublin
increase of 9% YoY.
asking, valuation had marginally stronger QoQ asking price growth of 2%
in Q1’16 compared to 1% QoQ at the national level.
In combination, the indices relating to house prices in
Ireland suggest that prices are growing on a YoY basis,
and sold prices The MyHome.ie results showed that asking prices were
up by 5% YoY on both the national and Dublin scales.
albeit at a moderating rate. This growth is being driven
primarily by the counties outside of Dublin where
while mortgage- Price valuations for Dublin and the country displayed
recovery in the market took hold at a later stage and
growth remains robust.
based prices fell similar levels of growth in the first quarter of 2016.
Residential prices, according to Sherry FitzGerald’s The well documented issues with supply in the residential
in the quarter national valuations index, increased by 1% QoQ and
the same QoQ expansion was recorded for Dublin
property market are placing upward pressure on
residential rents via increased demand across the
valuations. However, on a YoY basis valuations rose at country. Data from the Private Rental Tenancies Board
a stronger rate nationally (4%) when compared to Dublin (PRTB) has shown that in Q1’16 standardised rents
(1%). A similar trend for house valuations in Dublin was at the national level rose by 1% QoQ, but remained
reported by Knight Frank in Q1’16 with its prime index unchanged in Dublin. At over €920 per month, the
for the Capital rising by 1% on both a quarterly and average rent nationally was up by 9% YoY, while
YoY basis. average Dublin rents also increased by 9% YoY in
Q1’16 to reach over €1,300 per month, returning Dublin
The CSO’s mortgage transaction price index showed rents to boom levels. Daft.ie reported similar trends for
prices nationally remained stable in Q1’16, with mix- adjusted average rents in the first quarter of 2016
price decreases of 2% QoQ in Dublin offset by price with 2% QoQ growth recorded both in Dublin and the
increases of 1% QoQ around the rest of the country. rest of the country. On a YoY basis, rents increased by
On a yearly basis, prices nationally had increased by 9% in Dublin and by 10% in the rest of the country.
8%. However, the two speed nature of the Irish Average rents in the Capital, at over €1,450 per
property recovery was evident as YoY growth of 4% in month, were almost double the equivalents in the
Dublin in Q1’16 contrasted starkly with strong YoY rest of Ireland.
price increases of 11% in the rest of Ireland.
10Residential Property Prices Average Sold Price by
ASKING PRICES Q3’15 Q4’15 Q1’16 QoQ YoY County Q1 2016
Daft.ie National MAAA* (€) €205,484 €204,175 €210,333 +3% +6% Dublin €371,554
Daft.ie Dublin MAAA* (€) €306,540 €306,613 €312,642 +2% +1% Wicklow €331,672
Daft.ie National ex. Dublin MAAA* (€) €166,677 €164,838 €171,045 +4% +10% Kildare €254,741
MyHome National MAAA* (€) €205,024 €205,031 €207,596 +1% +5% Meath €231,037
MyHome Dublin MAAA* (€) €286,089 €285,921 €290,301 +2% +5% Cork €205,312
PRICE VALUATIONS Galway €180,306
Sherry FitzGerald: National (Index 1999 =100) 122.6 123.2 124.7 +1% +4% Kilkenny €176,736
Sherry FitzGerald: Dublin (Index Q4 1996 =100) 402.9 402.9 405.6 +1% +1% Louth €157,051
Kerry €150,931
Knight Frank Prime Dublin Residential 129.9 134.0 135.9 +1% +1% Clare €144,398
(Index Dec 2012 = 100) Wexford €140,818
PRICES BASED ON MORTGAGE TRANSACTIONS Limerick €140,775
CSO National (Index 2005=100) 84.0 86.7 86.5 0% +8% Waterford €138,531
CSO Dublin (Index 2005=100) 85.3 86.6 85.2 -2% +4% Carlow €136,512
CSO National ex. Dublin (Index 2005=100) 78.9 82.5 83.3 +1% +11% Westmeath €133,277
SOLD PRICES Laois €130,342
PPR National Average €236.783 €231,024 €236,486 +2% +10% Sligo €129,602
PPR Dublin Average €388,188 €380,507 €371,554 -2% +10% Tipperary €129,144
PRR National ex. Dublin Average €168,523 €171,839 €168,838 -2% +9% Monaghan €127,247
Daft.ie National MAAA* €194,231 €199,139 €200,999 +1% +9% Mayo €121,695
Daft.ie Dublin MAAA* €307,558 €303,773 €312,920 +3% +4% Cavan €119,204
Daft.ie National ex. Dublin MAAA* €150,712 €158,958 €158,020 -1% +13% Donegal €107,681
RESIDENTIAL RENTS Offaly €98,421
PRTB National Standardised Rents €903 €917 €922 +1% +9% Leitrim €88,583
PRTB Dublin Standardised Rents €1,291 €1,311 €1,314 0% +9% Longford €84,843
Daft.ie National MAAA* (€) €964 €979 €998 +2% +9% Roscommon €82,938
Daft.ie Dublin MAAA* (€) €1,409 €1,435 €1,464 +2% +9% Source: Property Price Register, DKM Analysis.
Transactions price data excludes properties that are not full market
Daft.ie National ex. Dublin MAAA* (€) €718 €727 €740 +2% +10% price and those under €20,000 and over €5 million, but includes VAT.
Not Mix-Adjusted.
** Transactions price data excludes properties that are not full market price and those under €20,000 and over €5 million but includes VAT. Not Mix-Adjusted.
* MAAA = Mix-Adjusted Annual Average.
** Transactions price data excludes properties that are not full market price and those under €20,000 and over €5 million but includes VAT. Not Mix-Adjusted.
QoQ refers to the latest quarter on quarter percentage change.
YoY refers to the latest year on year percentage change.
11Commercial The sentiment expressed in the various reports from
property agents on the Dublin office market in Q1’16
The stock of available office accommodation declined
by 20% (Lisney) to 24% (JLL) on the same quarter in
Office
is positive, reflecting the strong level of commercial 2015, although DTZ Sherry FitzGerald, who only
market activity in the opening months of the year. measure take-up when a building is occupied by a
Following the strong uplift in activity in 2015, with tenant, suggest the decline was more modest, at around
average take-up in Dublin of the order of 252,000m2, 7%. In a market comprising a total stock of around
Market
the take-up continued at a strong pace in Q1’16. The 3.34m2 in Q1’16 (DTZ SF), the vacancy rate across
total average take-up, according to data from five Dublin did not change much in the quarter. DTZ Sherry
property agents, came in at 53,700m2 in Q1’16 FitzGerald and JLL report an increase in the vacancy
The Dublin
compared with the corresponding figure of 45,700m2 rate in the quarter to 13.2% and 8% respectively. The
in the same quarter last year (+18%). According to remaining three agents report a decline in the vacancy
commercial property
Lisney and Knight Frank, the State (notably in the rate to as low as 7.7%, according to CBRE. The Dublin
semi-state sector) represented approximately 30 per city centre vacancy rate fell to between 3.7% (JLL) and
cent of take-up in the first quarter. Other dominant 8.7% (Lisney) while CBRE an DTZ Sherry FitzGerald
sector recovery
sectors were the computer or high-tech sector (34% report a CBD vacancy rate of 4.8% at the end of Q1’16.
according to CBRE) and financial services (20% CBRE).
gathered momentum
The significant rise in Dublin prime office rents during
The level of transactions activity in the city centre 2015 (+12%, DTZ SF) did not deter transactions in the
in first quarter
increased at a faster rate with average take-up in Q1’16 first quarter. That said, the trend in Dublin prime rents
at 32,500m2, up significantly on the same period in 2015 was unchanged in the quarter, according to three
(+29%). Based on the individual agents, the total take- agents, although JLL and CBRE report quarterly
up accounted for between 42% (DTZ SF) of the total increases of 9% and 5% respectively. City centre rents
Dublin take-up in Q1’16 and 84% (CBRE). Taking were also unchanged over the quarter in Q1’16,
average take-up levels, the city centre represented according to three agents, although JLL reported that
almost 60% of the total take-up in Dublin, up from rents increased by 9%. Office yields in Q1’16 ranged
54% in the same quarter last year. between 4.25% (Lisney) and 4.65% (CBRE).
The recovery in the Dublin commercial property sector The most notable development during the quarter was
thus continues to gather momentum. This is perhaps the scale of new development under construction at
not surprising given that Dublin has accounted for 46% the end of Q1’16. Estimates vary from 19 schemes
of the employment increase of 151,500 since the lowest comprising 179,000m2 (Lisney) to 26 comprising
point during the recession (Q1’12). Moreover, at end of 319,000m2 (CBRE) schemes, although a recent report
Q1’16, Information & Communications and Financial, from Savills suggests there are currently 35 building
Insurance & Real Estate were the only two sectors in projects underway in Dublin city. DTZ Sherry FitzGerald
Dublin that accounted for in excess of 50% of the total note that an additional four new schemes commenced
employment in those sectors across the State. construction in the quarter totalling 60,000m2. Thus
taking schemes under construction and awaiting
planning, there is substantial new supply expected over
the next three years across Dublin, although very little of
it will come to the market this year. This suggests that
there is likely to be further upward pressure on
rents this year.
12Snapshot of Dublin Office Property Market Indicators
Dublin Take-Up (‘000m2) Q3’15 Q4’15 Q1’16 YTD Dublin Vacancy Rates (%) Q3’15 Q4’15 Q1’16 QoQ
CBRE 51.7 75.2 52.4 263.1 CBRE 9.3 8.5 7.7 -0.8pp
DTZ Sherry FitzGerald 86.8 45.0 59.9 218.5 Sherry
DTZ Sherry
Fitzgerald
FitzGerald 14.1
13.4 -0.9pp
13.0 -0.9pp
13.2 +0.2pp
-0.9pp
JLL 55.8 90.8 45.1 280.4 JLL 10.2
7.9 -0.9pp
7.8 -0.9pp
8.0 +0.2pp
-0.9pp
Knight Frank 50.5 87.5 67.2 274.0 Knight Frank 10.5 8.8 8.3 -0.5pp
Lisney 45.8 91.6 44.0 263.4 Lisney 13.1 11.2 10.9 -0.3pp
Dublin City Centre Take-Up (‘000m2) Dublin City Centre Vacancy Rates (%)
CBRE 33.0 53.1 39.8 188.1 CBRE 7.5 6.4 6.0 -0.4pp
DTZ Sherry FitzGerald 21.1 11.8 25.3 65.8 DTZ Sherry FitzGerald 9.2 8.9 4.8 -4.1pp
JLL 25.5 54.5 24.2 160.0 JLL 4.6 3.7 3.7 0.0pp
Knight Frank 18.1 46.6 31.4 136.2 Lisney 10.8 9.3 8.7 -0.6pp
Lisney 26.5 58.8 37.0 177.0 Dublin CBD Vacancy Rates (%)
Dublin Vacant Stock/Availability (‘000m2) CBRE 5.4 5.0 4.8 -0.2pp
DTZ Sherry FitzGerald 447.7 435.1 439.9 DTZ Sherry FitzGerald 9.2 8.9 4.8 -4.1pp
JLL 272.2 268.9 275.3 Lisney 8.9 7.8 8.2 +0.4pp
Lisney 463.6 396.2 385.8 Dublin Office Yields (%)
Dublin City Centre Rents (€/m ) 2
Q3’15 Q4’15 Q1’16 QoQ CBRE 4.70 4.65 4.65 0.0pp
CBRE 565 592 592 0% DTZ Sherry FitzGerald 4.25 4.25 4.25 0.0pp
DTZ Sherry FitzGerald 555 592 592 0% JLL 4.50 4.50 4.50 0.0pp
JLL 592 592 646 +9% Knight Frank 4.50 4.50 4.50 0.0pp
Knight Frank 592 619 619 0% Lisney 4.20 4.25 4.25 0.0pp
Lisney 456 480 492 +2%
Dublin Prime Rents (€/m2)
CBRE 565 592 619 +5%
DTZ Sherry FitzGerald 555 592 592 0%
JLL 592 592 646 +9%
Knight Frank 592 619 619 0%
Lisney 570 592 592 0%
QoQ refers to the latest quarter on quarter percentage or percentage point change (Q1 on Q4). YTD refers to year to date i.e. the latest four quarters.
13Industrial Take-up estimates reported by four property agents for
Q1’16 were relatively similar, ranging from 51,118m2
largest sale was of 5,600m2 on Lower Ballymount Road,
Walkinstown in south west Dublin. Fynes Logistics
& Retail
(JLL - 40 transactions) to 64,747m2 (CBRE - 47 additionally agreed the first pre-sale in seven years in
transactions). CBRE noted that 46% comprised sales late 2015, for the facilities in Horizon Logistics Park
and the remainder were lettings. Take-up in Q1’16 was which are currently under construction (Lisney).
therefore down 25% (CBRE) which CBRE suggested
Property
was due to the serious constraints of modern industrial Due to the constrained supply, discussions about
and logistics accommodation in prime locations in speculative developments have begun, although there
recent months. More significant YoY declines were is no consensus about when such developments would
reported by other agents, with take-up according to JLL start. CBRE expect that rents would have to increase
down by 55%. Comparably 2015 was an extraordinary further while Lisney reported that Rohan Holdings has a
Market
year with one of the highest levels of take-up recorded development program to construct more than 27,870m2
in twenty-one years, so the decline in take-up in Q1’16 of speculative warehouse space in 2016 and 2017. JLL
is not surprising. The only source of data on availability expect to see speculative development later this year as
is DTZ Sherry FitzGerald who reported a sharp decline there is only one site currently under construction but
in Q1’16 to 582,000m2, indicating that take-up may more may apply for planning permissions in 2016.
continue at a low level as supply decreases.
Consequently the vacancy rate decreased to 14.3% Prospects for 2016 look promising even though Q1 did
Take-up down in (DTZ SF) by the end of the first quarter. have a lower take-up than in Q1’15 and Q4’15. However
2015 was an extraordinary year so similar levels of
Q1’16 as Grade A In terms of the quantity of space by size of buildings, a
little over one-fifth of the space (DTZ SF, Lisney) were
take-up may not materialise in 2016 due to the supply
limitations (JLL). Take-up will be centred in the south
supply constraints deals for buildings below 1,000m2. The volume of
transactions between 1,000 and 4,000m2 accounted for
west and north west areas although choice across all
size categories is restricted and will likely become
intensify 40% of the space, while the number above 4,000m2
accounted for 38% (Lisney). All agents reported that
south west Dublin was the dominant location in the
even more so as availability decreases.
The real challenge is the scarcity of properties in the
quarter with three of the five largest transactions taking locations and schemes that retailers are specifically
place in the area (JLL). The north west was the second targeting
most sought after location with 25% of take-up in
Q1’16 (JLL). Consumer sentiment increased at the beginning of the
quarter as the KBC/ESRI Consumer Sentiment Index
Dublin prime rents increased to between €78 (CBRE) reached a 15 year high in January 2016. However
and €81 (DTZ SF) per m2. The lease lengths are uncertainties such as the risk of ‘Brexit’ and political
constant at ten years with a break option after five uncertainty as well as global economic risks resulted in
years, however longer leases are being signed in areas sentiment weakening in February and March. The index
with intense competition for prime space (JLL). Thus recorded a slight increase in April, indicating that
rent free periods are under pressure but remain constant although the weakening trend did not continue,
at three months (JLL). Industrial yields varied between consumers are still cautious as the economic
5.25% (JLL) and 5.75% (CBRE and DTZ SF) in Q1’16. environment remains unclear. The slight improvement
in April may be due to the continued low inflation and
The largest deal in Q1’16 was the pre-let to Uniphar for low interest rates, both of which are supporting the
9,300m2 in Greenogue Business Park in south west financial position of Irish households, an area on which
Dublin, one of the first pre-lets to be agreed since 2007 consumers responded positively in the survey. Total
(Lisney). The rent will be €97 per m2 which is 15% employment increased by 44,100 in the year to Q4’15
above the headline rate for existing space (Lisney). The while retail sales volumes were up by 5.2% in the year
to March 2016.
14This is all welcome news for the retail property market Snapshot of Dublin Industrial Property Market Indicators
which is witnessing a notable increase in demand for
space from new entrants as well as from existing Irish
retailers looking to expand. However, the challenge is Dublin Take-Up (‘000m2) Q3’15 Q4’15 Q1’16 YTD
the scarcity of properties in the locations and schemes CBRE 128.0 115.6 64.7 406.5
that retailers are specifically targeting.
DTZ Sherry FitzGerald 127.7 102.6 59.5 402.3
In the capital city, Grafton Street is currently experiencing JLL 91.2 97.5 51.1 327.7
substantial refurbishments of three stores (Bewley’s
Lisney 137.2 86.0 60.9 365.4
Café, Karen Millen and & Other Stories) and interest in
space on Henry and Mary Streets has continued into Dublin Vacant Stock/Availability (‘000m ) 2
2016 (Lisney). As demand for retail space has increased, DTZ Sherry FitzGerald 1,046 633 582
the availability of prime retail space, especially in the
city centre, is at historically low levels (Lisney). However Dublin Prime Rents (€/m ) 2
Q3’15 Q4’15 Q1’16 QoQ
developments in the pipeline include Cherrywood CBRE 72.5 75.0 78.0 +4%
(albeit more long-term), the redevelopment of St
Stephen’s Green Shopping Centre and an extension to DTZ Sherry FitzGerald 75.0 75.0 81.0 +8%
the Square Shopping Centre in Tallaght (Lisney). JLL 75.3 78.0 80.7 +4%
Additionally Hines submitted a planning application in Lisney 75.0 78.0 78.0 0%
February to extend the Liffey Valley Shopping Centre
in west Dublin. The development is set to include Dublin Vacancy Rate (%)
22,000m2 of additional retail space, 1,800 car parking DTZ Sherry FitzGerald 25.8 15.6 14.3 -1.30pp
spaces and a 2,500 seat indoor Olympic size ice arena
(CBRE). One other notable scheme in the pipeline is the Dublin Yields (%)
major redevelopment and expansion of the Frascati CBRE 6.30 5.75 5.75 0.00pp
Shopping Centre in Blackrock, County Dublin, which is
DTZ Sherry FitzGerald 6.00 5.75 5.75 0.00pp
expected to get underway this year and deliver a total
gross floor area of 19,592m2 on completion. JLL 7.00 6.00 5.25 -0.75pp
Lisney 6.00 5.90 5.70 -0.20pp
This positive picture is also visible in parts of the rest
of Ireland. CBRE noted the following announcements - QoQ refers to the latest quarter on quarter percentage or percentage point change (Q1 on Q4). YTD refers to year to date i.e. the latest four quarters.
TK Maxx is expanding in Cork and Castlebar, Co. Mayo
and Homestore and More have leased a new store in
Portlaoise and are looking to expand in other counties.
Additionally Centra, Iceland, Lidl and The Range have
all announced plans to open new stores across
Ireland in 2016.
In the retail warehousing sector, over supply remains
an issue in many regional locations, with Lisney
commenting that Ireland has 352m2 of retail park
accommodation per 1,000 of the population compared
with the EU 27 average of 232m2 and 264m2 in the UK.
As consumer demand continues to recover the
requirement to refurbish existing or invest in new
capacity may increase.
15Commercial As the office market recovery extends space continued to fall in Q1’16, with just 16,650m2
Regional
available in Cork city centre. A total of two and a half
outside Dublin, the common thread times this amount of Grade A space was available in the
is the depletion of Grade A suburbs of Cork, two-thirds of which represented units
in the greater than 1,000 to 5,000m2 range. In Limerick,
accommodation the available Grade A space was 28,650m2, 8,000m2
Market
of which were in the Shannon Free Zone, with the
Information on the regional property market in the main balance split almost evenly between the city centre
urban areas - Cork, Galway and Limerick - is based on and the suburbs.
data provided by DTZ Sherry FitzGerald. There is further
information available from Lisney on the Cork property With ever demanding tenants firmly seeking Grade A
market. quality space, there is a growing opportunity to meet
this demand. However, development viability may be
The lack of Grade A At the outset it is noted that the stock of office
accommodation across the three markets was
an issue in some locations. In terms of construction
activity, a total of just 5,000m2 and 10,100m2 were under
space across the 1.199 million m2 at the end of Q1’16, 2% above the
corresponding figure at the end of 2015. The small scale
construction in Cork and Limerick respectively in Q1’16,
with nothing commenced in Galway during the quarter.
country is putting
of the office market outside Dublin is evident from the As the economic recovery becomes more broad based
fact that the aggregate stock figure for the three and spreads into the regions, the scale of new
counties was equivalent to 36 per cent of the total stock
office rents under
construction activity should pick up over the
in the Dublin market stock. Cork had the largest stock remainder of the year.
of office accommodation (564,850m2, +2.9% QoQ)
pressure followed by Limerick (329,800m2, +1.7%) and Galway
(304,000m2, +0.7%) in Q1’16, according to DTZ
Sherry FitzGerald. Upward pressure on rents expected to
Take-up levels were very subdued in Limerick and
spur development activity in sough
Galway where just five deals in total were transacted. In after locations
contrast, DTZ Sherry FitzGerald reported that Cork had
a substantially higher level of take-up in the first quarter, There is limited Q1’16 information available on the
due mostly to around one-half of the new building at industrial market outside of Dublin apart from research
One Albert Quay being occupied. As a result Grade A on the Cork market by Lisney. The latter reported
space dominated take-up in Cork city (98%, DTZSF). take-up in Q1’16 at just 2,350m2, down from 5.750m2 in
However, Lisney, due to a change in approach to the previous quarter. The available industrial building
measuring take-up, reported a much lower take-up stock declined in the quarter to 206,600m2, bringing the
level in Cork in Q1’16. overall vacancy rate down to 16%. Most of the take-up
is centred in the south suburbs (52% of the total). With
A total of almost 177,000m2 of space was available the first warehouse facility under construction (and
cross the three counties in Q1’16, over one-half of pre-let) in Little Island for some time and due for
which was in Cork. In terms of the supply of Grade A completion this year, Lisney state that new development
accommodation, net of signed and reserved space, DTZ will be required in the Cork industrial market over the
Sherry FitzGerald figures suggest that the tightest next 12 to 18 months. There is currently upward pressure
situation was in Galway city and suburbs, which only on rents, which rose in the south and east suburbs to
had 6,500m2 of Grade A space in Q1’16, 1,500m2 of €48-59 per m2, but were lower in the north suburbs,
which was in the city centre. Although supply levels in ranging between €38 and €48 per m2 in Q1’16.
Cork overall increased by 10% in the quarter (Lisney
report an increase of 2.4%), the volume of Grade A
16Regional Market Indicators
OFFICES
TAKE-UP (m2) Q3’15 Q4’15 Q1’16 YTD
Cork* 3,570 4,880 2,050 16,490
Cork 5,300 1,550 9,700 22,300
Galway 2,700 2,250 2,600 11,350
Limerick 16,900 5,700 1,100 26,450
VACANT STOCK/AVAILABILITY (m2)
Cork* 97,000 95,000 97,300
Cork 84,650 85,550 94,300
Galway 13,900 13,600 14,200
Limerick 71,200 66,800 68,300
PRIME RENTS (€/m ) 2
Q3’15 Q4’15 Q1’16 QoQ
Cork 250 250 270 +8%
Galway 215 220 220 0%
Limerick 172 172 172 0%
VACANCY RATE (%)
CORK
Cork Overall* 15.4 15.6 19.3 +3.7pp
Cork City Centre 16.1 16.2 18.5 +2.3pp
Cork Suburbs 15.0 15.2 16.5 +1.3pp
GALWAY
Galway Overall 4.6 4.5 4.7 +0.2pp
Galway City Centre 4.9 5.5 5.2 -0.3pp
Galway Suburbs 4.4 3.9 4.3 -0.4pp
LIMERICK
Limerick Overall 18.2 18.2 18.7 +0.5pp
Limerick City Centre 18.8 16.8 17.7 +0.9pp
Limerick Suburbs 13.7 14.5 14.0 -0.5pp
Limerick Shannon Free Zone 26.7 29.7 29.7 0.0pp
*Source is Lisney. All other data from DTZ Sherry FitzGerald.
QoQ refers to the latest quarter on quarter percentage of percentage point change (Q1 on Q4). YTD refers to year to date i.e. the latest four quarters.
17Investment The question on most minds as 2016 commenced was
would the record levels of investment in real estate in
Office Building in Dublin city centre, Classon House in
Dublin 14 and Parnell Car Park in Dublin 1. The portfolio
Market
Ireland in 2014 (c. €4.5bn) and 2015 (19
Special The UK will hold a referendum on whether to remain 4. Investment impact: Within the EU, the UK is
Report
in or to leave the EU on 23 June 2016. This will be a already significantly ahead of other member states
hugely important decision for the British people, with when it comes to attracting FDI. A Brexit could bring
major potential impacts on Irish business. Ibec strongly opportunities and threats for Irish FDI. Ireland may
supports continued UK membership of a strong, potentially gain from firms relocating from the UK
forward looking and globally competitive EU. although there would be significant competition from
other member states to attract this FDI. In the longer
Given the potential risks of a Brexit to Irish business, term, the UK could become more attractive for FDI as
Ibec sets out the impact Ibec has been actively supporting efforts to keep the
UK in the EU.
it could introduce enhanced business and investment
supports and would not have to comply with EU
of a possible Brexit on In May, Ibec co-hosted an event on the legal implications
state aid rules.
Irish business of a Brexit and in recent interviews with the main media
outlets in London, Ibec CEO, Danny McCoy, set out the
5. Regulatory divergence and customs impact:
regulatory divergences between the UK and the EU will
risks of a Brexit to Irish business as well as the impact make it more expensive for Irish companies to export to
on the wider EU. In April, Ibec released a report, The the UK as a result of greater compliance costs and
UK referendum on EU membership: The impact of a customs procedures.
possible Brexit on Irish business, which analyses the
potential impacts of a Brexit on Irish business. 6. Energy security: from a security of supply
perspective, Ireland would have to review the location
In its report, Ibec identified six potential risks and of its oil reserve from the UK to another EU member
assessed their impact on Irish business: state. From a competitiveness perspective, Irish firms
may be at a disadvantage if the UK decides to
1. Trade risk: the impact of a Brexit on trade varies by disregard State Aid legislation for the energy sector.
sector. Trade flows could potentially be reduced by 20%
with a greater impact on SMEs relying heavily on the UK Under the EU treaties, the European Council has two
market. In food and drink, Ireland and the UK are each years (with a possibility to extend) to agree a withdrawal
other’s largest export markets and these sectors would agreement with an exiting state. As no state has ever
be significantly impacted. A Brexit could also lead to left the EU, the timeline for an exit is uncertain. The UK
the introduction of a customs border and divergent government estimates that it could take a decade or
regulations. more to negotiate an agreement leading to a protracted
period of uncertainty for business.
2. Freedom of movement: as Ireland is the only EU
member state that shares a land border with the UK, a The Ibec report concludes by looking at potential
Brexit could lead to the introduction of border checks. models for the UK-EU relationship after a Brexit.
However, the Ibec report concludes that the likelihood The full report can be accessed here:
of movement of Irish people to the UK being restricted www.ibec.ie/0/Brexit
in the case of a Brexit is low.
3. Exchange rate risk: this is the most immediate
impact of a Brexit and is already being felt by Irish
exporters to the UK. Should a Brexit occur, the sterling
could weaken by a further 10-15% moving closer to
parity with the Euro in the aftermath of the referendum.
Potential sell-offs of UK assets and capital outflows
would exacerbate the depreciation.
2021
AIB’s Since its inception in July 2015, the specialist real estate
finance team in AIB, the Property Lending Unit, has
associated with property lending models. This more
traditional senior debt financing is structured in a way
Specialist
been actively involved in some of the largest and most that gives banks appropriate returns for the risks they
complex real estate finance transactions to have taken are taking but is priced much lower than mezzanine
place in the Republic of Ireland during that time. and equity debt recognising the relatively lower risk
banks are taking.
Property
A change at the helm of the team took place in January
2016 and Donall O’Shea is now Head of the Property While this change has led to a period of adjustment,
Lending Unit and is leading this specialist team of investors and developers have been able to complete
lenders along with Derek O’Shea who heads up all transactions using non-traditional sources of equity and
Development lending, and with Ciaran Mooney leading stretch senior debt (sometimes referred to as mezzanine
Lending
on real estate investment lending. debt). Interestingly, as the market moves on, the
Property Lending Unit in AIB is seeing more and more
The team of specialist lenders, together with their proposals where there is no mezzanine provider with
technical support and the imbedded team of Chartered the developers and investors having secured an equity
Unit
Surveyors and Engineers, has grown significantly partner rather than an alternative source of debt.
and now stands at 27 and benefits from a range of
experience in banking and relevant backgrounds. Within AIB, there are lending teams in our nationwide
Branch and Business Centre network who are ready to
The team is particularly proud of the “Deal of the support local property and construction proposals and
Year”, as voted for by Finance Dublin, in relation to with whom the real estate finance team work closely to
the €400m facility extended by AIB to the O’Flynn support commercially viable schemes.
A key player in the Irish Construction group.
The bank’s Advisory and Specialised Finance team are
real estate investment The team has been extremely active in the real estate
investment market and has provided funding to both
also positioned to work with our customers to provide
mezzanine and sponsored finance structures for
market
national and international customers on a variety of suitable deals in conjunction with the property lending
projects such as Regional and District shopping centres team, and thereby delivering a complete solution from
and retail parks in the Greater Dublin and Cork areas within AIB to our customers’ funding requirements.
and their respective commuter belts as well as
regionally dominant outlets. AIB is looking forward to supporting our customers
in the ever changing and evolving real estate world.
The team has also successfully funded a number of
office buildings in the Dublin CBD and suburbs and Contact Details for the AIB Property Lending Unit are
further afield in provincial cities such as Galway. Many as follows;
of these projects have distinctive asset management
opportunities and the bank’s team engages fully with Donall O’Shea Derek O’Shea
our customers in the development and pursuit of Head of Property Head of Development
these value enhancing strategies. Lending Unit & Specialist Assets
Tel; 01 772 0302 Tel; 01 641 4431
As the Irish real estate investment landscape evolves Email: donall.a.o’shea@aib.ie Email: derek.p.o’shea@aib.ie
Paul C McNamara FSCSI FRICS over the coming months and years, the bank is looking
Head of Property Strategy & for innovative ways to support the domestic property Ciaran Mooney,
and construction sectors. Head of Commercial Real Estate Investment
MI Property Lending Unit
Tel; 01 7726355
AIB Wholesale and Institutional Banking
Lending structures and debt packages available to both Email: Ciaran.e.mooney@aib.ie
Allied Irish Banks, p.l.c. is regulated developers and investors have changed with banks
by the Central Bank of Ireland. moving back to what would have been traditionally
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