Which sectors of the market will be most active next year?
The most active area in 2018 will be the office sector, with 3.9 million sq ft under construction in Dublin overall. We will see another record year in terms of take-up as existing global players grow their bases in Ireland and the real impact of Brexit will start to filter through to the office sector. With the European Central Bank still focused on acquiring 30 billion in bonds a month for 2018, this will continue to keep them at their record low levels and underpin the very strong demand from international investors in this sector through 2018.
Have rents and yields peaked across the various asset classes?
In retail, offices and the private rental sector (PRS), we would not envisage any further significant yield movement. However, there is still an opportunity for further yield compression in industrial, with a 150/175 basis points difference in yields still existing between the office and industrial sector.
Where are the best investment opportunities at this stage?
For 2018, we would see a very strong opportunity in industrial/logistics sector, underpinned by strong end-user demand, creating further rental growth and yield compression. The “build to rent” sector will also have a very strong year, and should be boosted by Minister Eoghan Murphy’s proposed changes, in the planning guidelines for build to rent. Good quality regional stock also represents good value.
One thing to watch out for in 2018?
I believe the sector to watch out for in 2018 will be the co-working and co-living sectors in Ireland. Globally, approximately 1.2 million people currently work in this emerging sector, with that figure forecast to rise to almost four million by 2020. US specialists We Work recently announced its first Dublin location, while Iconic Offices has approximately 23,225sq m (250,000sq ft) of space in the Dublin. This sector will grab a lot of headlines in 2018 and beyond.
Aidan Gavin is managing director of Cushman & Wakefield
