Market Optimistic for Year of the Ox.
- Known for their strength and determination, the Ox is usually a patient animal with a desire to make progress. All very relevant characteristics as we enter 2021.
Looking back to January 2020, expectation for the Commercial Property Market was for another solid performance. This was on the back of a healthy backdrop including low interest rate environment, strong International Investment demand combined with steady occupational demand and relatively low vacancy rates in the Office market.
Little did we know what was around the corner after the first reported Covid -19 case reached our shores at the end of Feb 2020. From mid March onwards the market stalled and uncertainty gathered pace with major disruption across the board. Following the introduction of Level 5 restrictions in October, market confidence took another hit and activity stalled for a second time.
Thankfully the Vaccine announcement in early November was a game changer and described as “a great day for Science and Humanity” by the Pfizer/BioNtech developers. With the cloud of uncertainty lifted, the European and Irish Markets reacted well with an increase in activity levels and renewed optimism. Although a number of uncertainties remain in the short term with the Pandemic and Brexit, we now take a look at some reasons to be cheerful for next year.
5 Reasons to be Cheerful for 2021
1) A number of Vaccines available worldwide including Pfizer and Moderna with over 90% efficacy. Following recent approval by the European Union, Ireland has received initial shipment of the Pfizer/BioNtech vaccine and initial roll out underway.
2) International Investors and Investment Funds have substantial Funds ear marked for European property and continue to target the Irish market.The top three Irish Office Investment sales in Dublin were acquired by International Investors during 2020 and this trend is set to continue over the next 12 months.
Bishops Square Dublin 8 acquired by Macquarie Group Patrizia AG: Region €180 million
Fitzwilliam 28 in Dublin 2 acquired by French Investor Amundi Real Estate: Region €170 million
Baggot Plaza, Baggot St Dublin 2 acquired by Deka Immobilien: Region €141 million
3) The Private Rented Sector (PRS) was the strongest performing sector in 2019 and with close on €1 billion Investment transactions during 2020 this sector looks set to continue to be the best performing sector during the current year. The only drawback is the limited amount of product available, however we still expect the PRS sector to continue to dominate Investment sales over the coming year.
4) The way people work, live and shop continue to change and evolve. These changes continue to underpin the demand for Industrial and Logistics space, making this sector one of the most sought after sectors during 2020. With limited supply of modern space, further rental growth and Investment yield compression is expected in this very popular sector during 2021.
5) European Fiscal and Monetary policy is likely to remain conducive to the recovery and with majority of Commercial Agents on PropertyLocator.ie reporting a very busy end to the year, there is a definite sense of confidence and optimism returning to the Irish market.
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