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Covid and Brexit threat hold back Irish market: CBRE

Dublin. [Photo: Jason Dent, Unsplash]

Property transactions in most sectors of the market in Ireland have been negatively affected by the threat of a no-deal Brexit and the Irish Government’s response to Covid-19, said CBRE in its final bimonthly report for 2020.

The firm said that investment volumes in the first three quarters were €2.4 billion compared to €3.3 billion in the same period last year.

Describing 2020 as a ‘challenging and unprecedented’ year for the market the firm said that with the exception of the multifamily and industrial and logistics sectors most occupational and investment sectors of the commercial property market were negatively impacted.

Retail, hospitality and leisure were particularly affected and the office occupier market was constrained by occupiers delaying relocation decisions. Development land sales were also significantly down the firm said.

“The inability of international investors to travel to the island to inspect properties posed a very real challenge and impacted investment transaction volumes,” said CBRE Ireland’s head of research Marie Hunt.

Many office transactions on hold indefinitely

2020 has been a very disrupted year for the Dublin office market. Following a bumper volume of transactional activity in Q1, Covid-19 created huge indecision and many large transactions have been put on hold indefinitely since the country first went into lockdown in March.

New supply continues to come on stream in a measured waybut there is a noticeable increase in ‘grey space’ as companies seek to sublet or assign excess accommodation. The volume of ‘grey space’ has increased by 65% since the onset of Covid, according to CBRE research. High-quality secondary accommodation is now competing directly with newly-built stock.

The industrial and logistics sector continues to buck the trend in the commercial property market, with strong levels of transactional activity recorded “boosted somewhat by Brexit planning but to a greater degree by increased Ecommerce activity”.

With the entire country now in Level-5 lockdown and non-essential retail stores closed for up to six weeks, an even greater proportion of retail spending in the run up to Christmas will occur online this year, CBRE pointed out. This in turn, is fuelling already strong occupier demand for modern logistics properties.