research investment insight q1 2018 - knight frank · investment insight q1 2018 €932.9 million...
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RESEARCHINVESTMENT INSIGHT Q1 2018
€932.9 million worth of investment transactions changed hands during Q1, more than double the amount that was recorded in Q1 last year. Volumes were supported by a number of large lot-sized transactions with four deals in excess of €50.0 million compared to just one during the same period of last year. In the context of the quantum of large deals that are likely to be brought to the market this year, we anticipate that volumes in 2018 will slightly exceed what was achieved in 2017, reaching approximately €2.5 billion.
to CK Properties, a company controlled by CK Hutchinson Holdings, for €176.0 million. Investment spend in the office sector in 2018 is anticipated to be supported by the completion of new office buildings which will see developers and their investment partners seek to exit their positions once the buildings have been let. An early example of this in Q1 was Triuva’s purchase of the NTMA tenanted No.1 Dublin Landings for €164.0 million from joint venture partners Ballymore and Oxley.
€932.9mworth of investmentstransacted in Q1
FIGURE 3
Investment spend by sector
Source: Knight Frank Research
FIGURE 4
Investment spend by buyer origin
FIGURE 5
Investment spend by vendor origin
Source: Knight Frank Research
United Kingdom
Ireland
Europe
Asia
United States
16%IRELAND 31%
UNITED STATES
23%EUROPE
4%UNITED KINGDOM
a4559d
83abb6
27%ASIA
Looking at the geographical spread of activity within Ireland, Dublin remains the focus of investor activity accounting for 76% of transactions, which is almost the same as the 75% market share the capital enjoyed in Q1 last year. Turning to investment transactions by sector, office sales comprised the largest proportion of activity with 55% of the market or €502.6 million. Two of the largest transactions were office deals, the largest of which was the sale of Hueston South Quarter
Mixed-use investments commanded the next highest share of the market with 21%, while the multi-family sector accounted for 14%. Increased allocations to the multi-family sector, which have risen from 2% when compared to Q1 last year, are reflective of the importance that investors now attribute to alternative assets – a trend likely to continue throughout 2018. The largest multi-family transaction saw Blackstone sell the Elysian Building in Cork City to Kennedy Wilson for €90.0 million. Finally, student accommodation, retail and industrial assets comprised less than 10% of the market in Q1.
The perceived reduction in the risk profile of the Dublin market internationally is increasing the supply of capital seeking to gain exposure to the market. This is reflected in the Q1 buyer profile which shows that the United States were the
3%EUROPE
54%UNITEDSTATES27%
IRELAND
1%UNITED KINGDOM
14%ASIA
Industrial
Retail
Student Accommodation
Multi Family
Mixed-Use
O�ce
55%OFFICE
14%MULTI-FAMILY
2%INDUSTRIAL
21%MIXED-USE
4%STUDENTACCOMMODATION
3%RETAIL
Source: Knight Frank Research
FIGURE 1
Irish commercial investment volumes € million
10-year average
0
500
1000
1500
2000
2500
Q1
2014
Q3
2014
Q4
2014
Q2
2014
Q1
2015
Q3
2015
Q4
2015
Q2
2015
Q1
2016
Q3
2016
Q4
2016
Q2
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Source: Knight Frank Research
NORTHERNIRELAND
24%REST OF IRELAND
76%DUBLIN
FIGURE 2
Investment spend by location
Source: Knight Frank Research
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© HT Meagher O’Reilly trading as Knight FrankThis report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by HT Meagher O’Reilly trading as Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of HT Meagher O’Reilly trading as Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of HT Meagher O’Reilly trading as Knight Frank to the form and content within which it appears. HT Meagher O’Reilly trading as Knight Frank, Registered in Ireland No. 385044, PSR Reg. No. 001266. HT Meagher O’Reilly New Homes Limited trading as Knight Frank, Registered in Ireland No. 428289, PSR Reg. No. 001880. Registered Office – 20-21 Upper Pembroke Street, Dublin 2.
CAPITAL MARKETS
Adrian Trueick, Director [email protected]
Peter Flanagan, Director [email protected]
Ross Fogarty, Director [email protected]
Shaun Collins, Surveyor [email protected]
RESEARCH
John Ring, Head of Research [email protected]
Robert O’Connor, Research Analyst [email protected]
FIGURE 6
Top 5 investment transactions
Source: Knight Frank Research
FIGURE 7
Investment yields
Source: Knight Frank Research
2
4
6
8
10 Industrial
Retail
Office
Q1 2018Q4 2017Q3 2017Q2 2017Q1 2017Q4 2016Q3 2016Q2 2016Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014Q1 2014
%
Q3 2017Q2 2017Q1 2017Q4 2016Q3 2016Q2 2016Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014Q1 2014
Property Sector Seller BuyerPrice
(million)Yield
Heuston South Quarter, Dublin 8 OfficeNorthwood
InvestorsCK Properties €175.0 4.88%
No.1, Dublin Landings, Dublin 1 OfficeBallymore/
OxleyTriuva €164.0 3.94%
Chatham & King Street, Dublin 2 Mixed-Use Lone Star Hines €155.0 N/A
The Elysian Building, Cork Multi-Family BlackstoneKennedy
Wilson€90.0 N/A
Cuirt na Coiribe, GalwayStudent
AccommodationDuff & Phelps Exeter Property €35.0 5.80%
largest buyers with 31% market share followed by Asia with 27% and European investors with 23%. The United States were the largest sellers accounting for 54% of the market. Far from signalling an exit of United States capital from the Irish
market, many of the sales were to other investment funds from the United States. For example, the third largest transaction of Q1 saw Lone Star sell a mixed-use scheme on Chatham Street and King Street to Hines for €155.0 million.
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