The Irish commercial property market is at the start of a new cycle for investment and development, as ECB interest rates continue on a downward trajectory and asset valuations stabilise across all sectors.
That is the view of CBRE’s outlook for 2025 report, which contains predictions for each sector of the Irish property market in the year ahead.
Colin Richardson, director and head of research with CBRE, cites a number of factors driving the trend, including the downward trend of European interest rates, the stabilisation of property yields, and a new coalition entering government, which should be positive for housing, planning, regulation and infrastructure.
“When we look to property yields, CBRE Ireland are now calling yields as stable for all sectors under our coverage, while the MSCI Ireland Index of total returns turned to positive territory in Q3 last year following eight consecutive quarters of negative returns. All indicating that we are now at the start of a cycle of investment and development where we can expect asset valuation growth,” he says.
On the downside, Mr Richardson points to the risk to Ireland’s economy of protectionist policies in the US under the incoming Trump administration, in the form of trade tariffs or cuts to US corporation tax.
“How this plays out will be one of the most determining factors shaping Irish global growth in the year ahead,” he says.
Overall, the Irish investment market recorded more than €2.4 billion of transactions in 2024, up by 30 per cent on the year – although this was largely due to the sale of the Blanchardstown Shopping Centre for about €575 million. Spend remains 40 per cent below the 10-year market average. Looking to 2025, CBRE expects to see a continued increase in investment activity, with full-year spend likely to trend above €3 billion.
With more forced office sales expected in the secondary office subsector, CBRE expects to see an uptick in investment activity in this sector. There is also now greater transparency in pricing for secondary offices in the market – particularly due to the sales of buildings such as North Dock One and Two and Connaught House. According to Mr Richardson, this provides “firm comparable pricing and will mean more buildings will see valuations marked lower on the books, and this could lead to more forced sales as debt covenants are breached”.
[ Is the only way up for Ireland’s office property market in 2025?Opens in new window ]
On the leasing front, Mr Richardson expects the office vacancy rate (currently one of Europe’s highest) to continue to decline.
“Just 62,000sq m of Dublin office stock is due to complete in 2025, the lowest level since 2015. This will aid the decline in vacancy.”
This might drive rents up to €65 per sq ft in 2025, “driven by the tightening of supply of sustainable stock in core locations”.
On the residential front, the report expects that apartment completions will decrease further in 2025. “By 2026, the construction of private rental apartments will significantly decrease, as the majority of recent apartment commencements are social and affordable in tenure.”
Some large commercial sites are coming to market in 2025, including the receivership sale of Camden Yard in Dublin 8. Also, on land development, Mr Richardson expects the introduction of the Residential Zoned Land Tax (RZLT) to stimulate further residential site sales.
Transactional activity in the hotels sector is expected to remain strong this year, with a similar level of transactional volumes forecast for the market in 2025, at about €900 million. Hotel rates should come under further pressure, however, this year as 1,500 hotel rooms are due to open in 2025.
In retail, we should expect more experiential retail and leisure offerings in the year ahead, as brands such as Barry’s, Bounce, Flight Club and Lane7 prepare to enter the Irish market.
Increased levels of nearshoring, and Ireland’s strong consumer spending, should be positive catalysts for leasing momentum in the logistics/industrials sector in 2025. CBRE is forecasting rents to grow to €14.50 per sq ft in 2025, and yields to remain stable at 5 per cent.
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