The IRISH Commercial Property Market Overview
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Transcript of The IRISH Commercial Property Market Overview
PREPARED FOR
THE IRISH COMMERCIAL PROPERTY MARKET OVERVIEW
Marie Hunt, CBREJune 20th 2013
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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
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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
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Prime Rents | 56% Peak to Trough DeclineTHE OFFICE MARKET
Prime Dublin Office Rents | Q1 2000- Q1 2013
SOURCE: CBRE, Q1 2013
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Take-Up vs. VacancyTHE OFFICE MARKET
Dublin Annual Office Take-Up vs. Vacancy | 2004 – Q1 2013
SOURCE: CBRE, Q1 2013
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City Centre Office VacancyTHE OFFICE MARKET
Dublin City CBD Vacancy Rates | Q1 2013
SOURCE: CBRE, Q1 2013
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CBRE PRIME RENT SERIES Peak June 2013 Trending Prime Rent Prime Rent € per sq m € per sq mRETAIL 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 WeakerSHOPPING CENTRES Prime Zone A 3,900 3,000 StableSecondary Zone A 2,800 2,000 WeakerRETAIL WAREHOUSES Prime 360 215 StableSecondary 320 80 WeakerOFFICES Prime City Centre Dublin 673 306.7 StrongerSecondary City Centre Dublin 377 194 StableSuburban Dublin 296 172 StablePrime Provincial 270 135 WeakerINDUSTRIAL Prime Dublin 130 60 StableSecondary Dublin 100 37 StablePrime Provincial 90 33 WeakerPresentation to PRAI – June 2013
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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 ?….
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REGIONAL HIGH STREET VACANCY
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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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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…
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IRISH INVESTMENT SPEND 2006 – Q1 2013
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INVESTMENT INTO IRELAND 2012Over €545m of transactions > €1m signed in 2012
35 transactions > €1m
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ANALYSIS OF IRISH INVESTMENT SPEND Q1 2013
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IRISH TOTAL RETURNS & CAPITAL GROWTH
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CBRE IRELAND EQUIVALENT YIELD SERIES Peak June 2013 Trending Yield % Yield %RETAIL SHOPS Prime High Street 2.50 5.75 StrongerGood Secondary High Street 3.50 7.00 StrongerPrime Provincial High Street 3.25 8.00 StrongerSHOPPING CENTRES Prime 3.50 7.50 StrongerSecondary 4.25 9.50 StrongerRETAIL WAREHOUSES Prime 4.25 7.75 StrongerSecondary 5.00 11.00 StrongerOFFICES Prime City Centre Dublin 3.75 6.25 StrongerSecondary City Centre Dublin 4.25 7.75 StrongerSuburban Dublin 5.00 8.75 StrongerPrime Provincial 5.75 9.50 StrongerINDUSTRIAL Prime Dublin 4.75 8.75 StrongerSecondary Dublin 4.75 10.75 StrongerPrime 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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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 …
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IRISH HOTEL SPEND 2006 - 2013
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INVESTMENT IN HOTELS IRELAND 2012Over €146m of hotel sales in 2012 in 24 transactions
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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….
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DEVELOPMENT LAND SALES 2008 – Q1 2013
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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
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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
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2012 GLOBAL LOAN SALES COMPLETED37% of €9.79bn (Original Loan Value) in 2012 comprised Irish assets
Approximately €836 million paid for Irish Loans in 2012
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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
?
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Stages of a Property Market Cycle
Source | Homer Hoyt – 100 Years of Land Values in Chicago
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QUESTIONS?
Marie HuntExecutive Director, CBRETel + 353 1 618 5543
Email [email protected]
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