While Britain may be experiencing something of a commercial property boom at the moment, this is largely due to the number of foreign investors looking for a financially secure foothold in Europe increasing demand on a massive scale. Yet across the Irish Sea, this trend has failed to materialise thanks to ongoing problems in the Eurozone – that is, up until very recently.
According to Investment Property Databank Ltd.’s quarterly property index, commercial property prices in Ireland rose for the first time in six years in the three months to the 30th September. While this increase was relatively small, at 0.3 per cent, it is proof that the worldwide economic recovery is starting to take hold and bolster the economies of even the countries hit hardest by the Eurozone crisis.
Much of this rise in price is due to the sudden popularity of Dublin as a business centre, with office take-up in the city rising dramatically throughout the quarter. The National Asset Management Agency (NAMA) believes that this popularity will prove extremely profitable for Ireland over the next decade.
NAMA was established by the Irish Government in December 2009 in order to combat the severe issues created by excessive property lending within the banking sector. After acquiring property loans with a nominal value of 74 billion Euros soon after its creation, NAMA decided that the best way of dealing with state losses as a result of bailouts would be to obtain the maximum financial return possible on this portfolio – a process it estimates will take around 10 years.
As the market has now become more buoyant, NAMA is turning its attention to make assets available to interested investors and fill any shortfalls in the commercial property industry. Office space remains a priority; however, Chairman Frank Daly warns that it could be some time before properties acquired by NAMA become available.
Speaking in Belfast, Mr Daly said; “In sectors where demand is rising, as is now the case with the Dublin office and residential sectors, we are moving quickly to address supply shortages that can be met from our portfolio – evidenced by some important transactions in recent weeks and a noticeable acceleration of such in recent months.
“As the economy picks up, North and South, our debtors will respond by releasing supply in response to emerging demand.
“In some cases that supply will be market ready – in others it will need investment in completion, in yet other cases it will mean brown-field or green-field development.”
Do you think demand for office space will increase as Ireland’s economy improves, or will investors still be more inclined to locate to areas such as London and Manchester?
