- BNP Paribas Real Estate: Ireland Investment Market Report Q4 2023 - slowest fourth quarter in over a decade
- A ‘transactional logjam’ caused by mispricing holding back transactions
- Lowest residential spend since 2017 as State bodies crowd-out private capital
- Logistics and retail investment grow while residential and office shares continue to decline
- US and UK net divestors of Irish property in 2023
Q4 has historically accounted for 37pc of the year’s investment property spending as bonus culture and, occasionally, tax changes create an urgency to get deals signed. However, according to the BNP Paribas Real Estate Ireland’s latest report, seasonal dynamics could not rescue a dismal 2023, and just €434.6m of property changed hands in Q4 – accounting for just 24% of the year’s total. This represented a 59pc year-on-year drop and was the weakest Q4 in over a decade.
With core international buyers on the sidelines for now, and with US and UK capital flows turning negative, domestic buyers accounted for 28.5pc of spending during 2023 – their highest share since 2018.
John McCartney, Director, Head of Research, BNP Paribas Real Estate Ireland spoke about the report’s findings;
“2023 faded-out meekly with just €434.6m of assets trading. Indeed, this statistic probably flatters the reality as one transaction accounted for more than half of total spending.
Turnover for the full year reached €1.85bn, a 69pc contraction compared with 2022, and the lowest out-turn since 2012. Just 114 deals were done in 2023. This compares with a 10-year average of 223, and with a high-water mark of nearly 300 deals in both 2014 and 2016.
While no immediate recovery is expected, market conditions should improve later in 2024 because of expected interest rate cuts and improved liquidity as forced sales come through.”
Other notables from the BNP Real Estate Ireland Investment Market Report Q4 2023:
- Logistics attracted over €520m of capital and, for the first time, topped the investment league table with 28pc of the pie.
- A step-change in retail investment from €359m in 2022 to €407m last year, propelling retail’s market share to 22pc - its highest since 2017.
- Residential investment slowed from an average of nearly €2bn per annum between 2019 and 2022, to just €433m last year – the lowest out-turn since 2017.
- Office share continued to decline and has approximately halved since 2019/2020. Over the full year, 20 office assets traded, adding to a combined spend of €386m - representing the smallest flow of office investment since 2012.
- No prime, new-build offices have now been bought since Q3 2022.
- Only 25 transactions of €20m or more occurred in 2023. This is the lowest number since 2013, and 43pc below the ten-year average.
- Private investors were behind 46pc of last year’s deals (31pc in 2022) and these buyers invested €4.7m – 16pc below what they paid in 2022 and 70pc below the overall market average.
- The share of spending accounted for by institutions such as REITs and insurance companies fell from 37pc in 2022 to 11pc last year as buyers of core assets baulked at vendors’ asking prices.
