Prospective investors who are interested in the Irish commercial property market are more positive than during the past five years, according to the National Asset Management Agency (NAMA) chief executive. Brendan McDonagh has said that the perception of the Emerald Isle has changed and that a slight recovery in the market is starting.
McDonagh has explained that many people who turned away from Ireland four or five years ago are now coming back into the market and are especially interested in putting their money into Irish property assets and Irish debt.
Prices during this period have dropped by 65 per cent, making commercial property valuations for office and industrial investment quite attractive to investors. Yields of over eight per cent are not uncommon in the current market, and with five year government bond yields coming in at three per cent or less, it’s no secret why investors are turning to commercial property right now.
Over the next four years, NAMA will be offering €2bn in vendor finance to potential commercial property buyers. A significant portion of the available funds will be made available for properties in Ireland. In 2011, the total amount invested in the commercial property market was only €200m. The additional funds should provide the shot in the arm the market needs to improve its performance over the next few years.
According to McDonagh, NAMA should also be ready to offer Qualifying Investor Funds (QIF) before the end of the year. The plan is subject to regulatory approval. The QIFs will allow international investors to get into the Irish commercial property market without having to acquire the underlying assets to do so.
Investors will no doubt be reevaluating their options in light of the positive returns which can be achieved from investing in Irish commercial real estate. There are a number of indicators which make now the time to add some Irish holdings to a portfolio.
