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European commercial investments over €265bn


Strong performance: Kate Ryan

Strong performance: Kate Ryan

Strong performance: Kate Ryan

New research from BNP Paribas Real Estate shows that some €265.2bn was invested in commercial property across Europe in the third quarter of 2018 on a rolling year basis.

The figure represents an increase of 2% compared with the same period in 2017.

The office sector accounted for 54% of total investment volumes, increasing to €114bn, or by 3% relative to last year.

Kate Ryan, head of research at BNP Paribas Real Estate Ireland, said that the strong performance of the European office sector was being replicated in the Irish market, where offices have accounted for 43% of total investment turnover during the same period.

BNP Paribas's research noted the growth in the number of 'mega deals' (€100m+).

In the three months to the end of September, its share of total investment volume rose to 44%, compared with 43% last year. A total of €115.7bn mega deals were transacted across Europe in the third quarter of this year.

Kate Ryan said: "We are seeing a similar trend towards larger lot sizes in the Irish market with nine deals worth over €100m transacting so far in 2018 compared with just four in 2017."

The most valuable transaction to date this year in Ireland was the BNP Paribas Real Estate-brokered sale by US fund Northwood Investment Corporation of Heuston South Quarter (HSQ) in Dublin 8 to CK Hutchison Holdings.

The €175m off-market transaction was closely followed in terms of value by the sale of Ballymore and Oxley's No 1 Dublin Landings to German institutional investor Triuva for €164m and an off-market office swap deal between IPUT and State Street for €160m.

According to BNP Paribas's research, prime office yields in Dublin now stand at 4% having declined by 25 basis points year-on-year.

While this is low relative to previous years, the report notes the contrast between yields in Dublin and other European cities.

In London prime yields have stabilised at 3.5%, while Paris saw a decline of five basis points annually to bring prime yields down as low as 3%

Yields in Berlin meanwhile have fallen as low as 2.9%.

Kenneth Rouse, managing director at BNP Paribas Real Estate, said: "With the prime office yield stabilised at 4%, Dublin as a European capital still displays a strong degree of relative value across its cohort of peers and remains a strong proposition for international investors".

Belfast Telegraph