Dublin is the fifth busiest real estate market in Europe with more than €3 billion invested between the end of last year and the third quarter of 2021, according to a new report by consultancy PwC and the Urban Land Institute, a US-based think tank.
This put the Irish capital on a par with Paris and ahead of cities such as Oslo, Milan and Manchester. London came top with €16 billion of capital inflows, followed by the German cities of Frankfurt, Berlin and Munich.
The report, which takes in the views of 844 property professionals, ranked Dublin 13th out of 31 European cities for real estate prospects, in other words investment and development opportunities, down two places from last year, “perhaps reflecting that the gains from Brexit have now largely been realised”.
A number of companies, particularly financial firms, have moved or opened new EU head offices in the Irish capital since the Brexit referendum was passed in 2016. Nonetheless, Dublin’s ranking is up from 26th in 2012.
Institutional property investors have flooded into Ireland over the past decade, taking advantage of strong rental yields. Estate agent Sherry FitzGerald estimates that private rental sector investors have invested about €7 billion into the Irish property market since 2011.
The PwC report noted that one private equity investor said of Dublin that “every language under the sun is spoken by the people, and the tax regime is beneficial”.
Investment
Joanne Kelly, real estate leader with PwC Ireland, said: "Dublin and Ireland remain a very favourable location for real estate investment. We have a highly skilled English-speaking workforce, a pro-business economy and we are part of the EU with access to over 300 million consumers."
London topped the league table in terms of real estate prospects, ahead of Berlin and Paris. “Everyone was talking down London because of the pandemic and Brexit. But then a year later they will say that it is undervalued, and they will run to London,” said one private equity investor cited in the report.
The report highlighted a clear upturn in confidence among property industry leaders, with business confidence in the real estate sector at the highest level since 2014, while noting many are still coming to terms with the radical changes to the business of real estate brought about or accelerated by Covid-19.
“Much depends on the post-lockdown shape of office demand – still to be determined,” it said.
The increased level of confidence was also supported by continuing strong investor demand, with both the availability of debt and equity expected to be plentiful, the report stated.
Challenges
Kevin Nowlan, chairman of Urban Land Institute Ireland and chief executive of Hibernia Reit, said: "There is positivity in the real estate market with good investment opportunities in many capitals including Dublin.
“While headwinds exist such as economic uncertainty, labour and supply chain challenges, surging energy costs and adapting for a sustainable environment, nevertheless, the real estate industry is learning to live with Covid-19. Demand for a variety of real estate sectors remains strong, with investment returns overall looking up.”
