PREPARED FOR THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW Marie Hunt, CBRE June 20 th 2013.
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Transcript of PREPARED FOR THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW Marie Hunt, CBRE June 20 th 2013.
![Page 1: PREPARED FOR THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW Marie Hunt, CBRE June 20 th 2013.](https://reader035.fdocuments.in/reader035/viewer/2022062404/551a5e7c55034643688b4a5c/html5/thumbnails/1.jpg)
PREPARED FOR
THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW
Marie Hunt, CBREJune 20th 2013
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2CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
AGENDA
• The Occupier Markets
− The Office Market
− The Retail Market
− The Industrial Market
• The Investment Market
• The Hotels & Licensed Market
• The Development Land Market
• Loan Sales
Presentation to PRAI– June 2013
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3CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
Growth in Dublin Office Stock THE OFFICE MARKET
Growth in Dublin Office Stock | 2004 - 2013
SOURCE: CBRE, Q1 2013
Presentation to PRAI – June 2013
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4CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
Prime Rents | 56% Peak to Trough DeclineTHE OFFICE MARKET
Prime Dublin Office Rents | Q1 2000- Q1 2013
SOURCE: CBRE, Q1 2013
Presentation to PRAI – June 2013
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5CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
Take-Up vs. VacancyTHE OFFICE MARKET
Dublin Annual Office Take-Up vs. Vacancy | 2004 – Q1 2013
SOURCE: CBRE, Q1 2013
Presentation to PRAI – June 2013
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6CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
City Centre Office VacancyTHE OFFICE MARKET
Dublin City CBD Vacancy Rates | Q1 2013
SOURCE: CBRE, Q1 2013
Presentation PRAI – June 2013
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7CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
CBRE PRIME RENT SERIES Peak June 2013 Trending Prime Rent Prime Rent
€ per sq m € per sq m
RETAIL
SHOPS Prime High Street Zone A 10,000 4,500 StableGood Secondary High Street Zone A 7,500 4,000 StablePrime Provincial High Street 4,500 3,500 Weaker
SHOPPING CENTRES Prime Zone A 3,900 3,000 StableSecondary Zone A 2,800 2,000 Weaker
RETAIL WAREHOUSES Prime 360 215 StableSecondary 320 80 Weaker
OFFICES
Prime City Centre Dublin 673 306.7 StrongerSecondary City Centre Dublin 377 194 StableSuburban Dublin 296 172 StablePrime Provincial 270 135 Weaker
INDUSTRIAL Prime Dublin 130 60 StableSecondary Dublin 100 37 StablePrime Provincial 90 33 WeakerPresentation to PRAI – June 2013
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8CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
THE OFFICE MARKET
Continued activity from existing occupiers and new entrants…
Overall level of demand robust…40 transactions signed in Q1…
Some rental growth emerging for prime although aggregate relatively stable…
Incentives starting to shrink…
Some improvement in the availability of funding ….
An increase in corporates buying premises…
An increase in refurbishment projects and pre-planning discussions although
no speculative development anticipated for some time yet…
Continued gradual decline in the overall rate of vacancy…
Change of planning regime in Dublin Docklands…
Increased transparency due to new national database ?….
Presentation to NTMAPresentation to PRAI– June 2013
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9CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
REGIONAL HIGH STREET VACANCY
Presentation to NTMAPresentation to PRAI– June 2013
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10CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
THE RETAIL MARKET
Some improvement in this sector over recent months as consumer confidence
starts to stabilise but conditions still challenging…
Vacancy levels a concern, particularly in provincial locations…
Good demand from existing retailers and new entrants although largely
focussed on core locations….
Greater focus on developing multi-channel offerings as online sales escalate…
Competition for the best pitches intensifying due to lack of new accommodation
coming on stream…
Potential for some limited rental growth in key locations although aggregate
remaining relatively flat….
Rates now more topical than rents for many retailers…
Presentation to NTMAPresentation to PRAI– June 2013
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11CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
THE INDUSTRIAL MARKET
Strong demand from a range of specialist occupiers, particularly for
prime buildings…
Greater incidence of occupiers purchasing premises, instead of
renting…
A number of significant land sales in negotiation …
No speculative development anticipated other than ‘design & build’…
Rental values beginning to stabilise…
Pricing not the key driver of location decisions…
Short lease terms the norm…..
Multi-channel retailing boosting the demand for logistics and distribution
facilities…
Presentation to NTMAPresentation PRAI– June 2013
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12CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
IRISH INVESTMENT SPEND 2006 – Q1 2013
Presentation to NTMAPresentation to PRAI– June 2013
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13CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
INVESTMENT INTO IRELAND 2012
Over €545m of transactions > €1m signed in 201235 transactions > €1m
Presentation to NTMAPresentation to PRAI – June 2013
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14CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
ANALYSIS OF IRISH INVESTMENT SPEND Q1 2013
Presentation to NTMAPresentation to PRAI – June 2013
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15CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
IRISH TOTAL RETURNS & CAPITAL GROWTH
Presentation to PRAI – June 2013
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16CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
CBRE IRELAND EQUIVALENT YIELD SERIES Peak June 2013 Trending
Yield % Yield %RETAIL SHOPS
Prime High Street 2.50 5.75 Stronger
Good Secondary High Street 3.50 7.00 Stronger
Prime Provincial High Street 3.25 8.00 Stronger
SHOPPING CENTRES
Prime 3.50 7.50 Stronger
Secondary 4.25 9.50 Stronger
RETAIL WAREHOUSES
Prime 4.25 7.75 Stronger
Secondary 5.00 11.00 Stronger
OFFICES
Prime City Centre Dublin 3.75 6.25 Stronger
Secondary City Centre Dublin 4.25 7.75 Stronger
Suburban Dublin 5.00 8.75 Stronger
Prime Provincial 5.75 9.50 Stronger
INDUSTRIAL
Prime Dublin 4.75 8.75 Stronger
Secondary Dublin 4.75 10.75 Stronger
Prime Provincial 5.75 12.00 Stable Prime Yields refer to an equivalent yield for a prime (well specified, well-located and rack-rented) property let to a strong
tenant(s), on a lease with 10 years unexpired and open market rent reviews (upwards or downwards)
Prime Provincial refers to Cork, Galway, Limerick and Waterford only.Presentation PRAI – June 2013
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17CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
THE INVESTMENT MARKET
Continued strong international appetite for prime investment opportunities and
portfolios…
Domestic investors dominant but mainly for secondary and provincial
opportunities…
Primary attraction is re-pricing from peak and the relative attractiveness of
yields…
IPD series moving back into positive territory…
New sources of funding from overseas boosting liquidity…
Continued polarisation …
Potential for prime yields to harden further due to the weight of money…
Potential for secondary yields to soften further…
More loan sales activity anticipated …
Presentation to NTMAPresentation to PRAI – June 2013
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18CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
IRISH HOTEL SPEND 2006 - 2013
Presentation to NTMAPresentation to PRAI – June 2013
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19CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
INVESTMENT IN HOTELS IRELAND 2012Over €146m of hotel sales in 2012 in 24 transactions
Presentation to NTMAPresentation to PRAI – June 2013
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20CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
THE HOTELS & LICENSED MARKET
More hotel and pub properties coming to the market…
Demand from international buyers primarily focussed on Dublin…
Domestic buyers focussed on provincial opportunities…
An increase in pub properties going into receivership and ultimately being
released for sale…
Increase in refurbishment projects …
2 new hotels opening in Dublin in 2013 but several hotel projects planned…
Demand focussed on properties in Dublin 1,2 and 4 and profitable hotels in
Cork, Galway and Kilkenny…
Improvement in funding, both from domestic banks and overseas…
The Gathering 2013….
Presentation to PRAI – June 2013
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21CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
DEVELOPMENT LAND SALES 2008 – Q1 2013
Presentation to PRAI – June 2013
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22CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
THE DEVELOPMENT LAND MARKET
Continued volume of both greenfield and brownfield land coming to the market …
An increase in owner-occupier demand …
Demand primarily local although some international investors buying sites…
Demand particularly strong for sites priced below €500,000…
An increase in the number of license and joint venture transactions
Strongest demand for:
• Sites with planning for up to 50 houses in Dublin
• Sites in good locations that suit discount retailers
• Partially-complete residential developments in good locations
• Sites in Dublin city centre that could accommodate student housing
• Strategic sites that meet the requirements of corporate occupiers wanting to develop bespoke
facilities
Presentation to NTMAPresentation to PRAI – June 2013
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23CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
COMPLETED LOAN SALES IRELAND 2012 Vendor Date Name Buyer Loan €m Discount Location
Lloyds Jun 2012 Prince Kennedy Wilson &
Deutsche Bank
€360.0 83% Ireland
GE Capital Aug 2012 Pepper Home Loans
€600.0 60% Ireland
AIB Oct 2012 Kildare Lone Star €650.0 60% Ireland (90%) & UK
(10%)
Lloyds Nov 2012 Pittsburgh CarVal €380.0 75% Ireland
Lloyds Nov 2012 Lane Apollo €1,800.0 90% Ireland
Presentation to PRAI – June 2013
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24CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
2012 GLOBAL LOAN SALES COMPLETED
37% of €9.79bn (Original Loan Value) in 2012 comprised Irish assets Approximately €836 million paid for Irish Loans in 2012
Presentation to NTMAPresentation to PRAI – June 2013
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25CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
LOAN SALES IRELAND 2013 Vendor Date Name Buyer Loan €m Discount Location
NAMA May 2013 Aspen Starwood Capital/Catalyst
Capital/Key Capital
Consortium (80%) & NAMA (20%)
€800 m c.75% Ireland
NAMA 2013 Club
Lloyds 2013 ?
NAMA/IBRC 2013 Delta
?
Presentation to PRAI – June 2013Presentation to PRAI – June 2013
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Stages of a Property Market Cycle
Source | Homer Hoyt – 100 Years of Land Values in Chicago
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27CBRE ANALYSIS | Office Availability & Vacancy Rates | May 2013
QUESTIONS?
Marie HuntExecutive Director, CBRETel + 353 1 618 5543
Email [email protected]
Presentation to NTMAPresentation to PRAI – June 2013Presentation to PRAI – June 2013