With demand in Ireland’s commercial property market continuing to gather pace, the National Asset Management Agency (NAMA) has admitted it will run out of saleable assets in less than four years.
The revelation — included in the state bad bank’s 2015 policy statement — comes as surveys from both sides of the border report record highs in commercial and industrial investment.
In July, NAMA predicted it would have completed most of its work by the end of 2018. The agency now says that it expects to complete much of its work by end-2017 or mid-2018.
“Based on its analysis of the residual portfolio and on the assumption that the improved Irish market conditions can be sustained into 2015 and 2016, the board is confident that it will be in a position to redeem in full the senior and subordinated debt and that it may, potentially, be in a position to generate a surplus,” the annual statement adds.
To take advantage of the international appetite for Irish assets NAMA has sharply increased the rate at which it is selling off its portfolios. Surprising it reported a loss of €88.2m (£69.5m) for the second quarter of the year after taking an impairment charge of almost €57m (£45m) on May to June loans and receivables.
The surge in Irish real estate is reflected in the latest figures from global financial analysts IPD which claims the country’s commercial transactions for the 12 months to September rose by 36.6 per cent — almost 17 per cent above the UK for the same period.
Colm Lauder is a senior associate at parent company MSCI. “The bounce-back of the Irish commercial property market has continued to impress during this year’s third quarter, with the year-on-year rise in values now exceeding 25 per cent,” he commented.
“However, it must be remembered that this follows six consecutive years of falling values and the recent strong growth is coming from a low base as values remain discounted by up to 50 per cent from what they were seven years ago.”
Across Ireland office values have risen by 33.2 per cent over the past year, with the Dublin office market alone rising by a similar figure. The IPD reports also shows that Irish retail properties are now rivalling the office sector, with shop property values growing by 20 per cent after six straight years of decline.
Industrials have proved the weakest of the three main sectors, with third quarter capital growth of just 1.8 per cent; similar to the same 2013 period. “This was, however, still the strongest quarterly growth since June, 2007,” adds IPD.
“Perhaps most encouragingly, the current rise in capital values is now being driven, more and more, by market rental growth, which has now returned to each of the main commercial property sectors as confidence in the Irish economy continues to strengthen,” says its report.
In a separate survey, property consultants CBRE claim that more £400m has been invested in Northern Ireland’s commercial property so far this year.
Twenty-one deals were signed during the first nine months of the year with a total worth of £411m. And figures for the July to September quarter report over £267m changing hands — £123m more than for the first two quarters combined.
