Market Insights

As your trusted investment partner, we are committed to delivering innovative, robust strategies that help you achieve your investment goals. We place the highest value on original research, using intellectual rigour to question traditional paradigms. As transparency is a key part of our partnerships with clients, we commit to sharing these insights with you. Below, you’ll find some of our recent market commentaries and thought leadership.

Pension Irish Property Fund - Quarter 2 2023

The Fund produced a total return of -2.94% in Q2. This was largely driven by yield expansion in the office sector – negatively impacted by the continued rise in interest rates, lower occupational demand and increased allowances for future capital works to enhance building specification, in particular expenditure to enhance sustainability credentials. In addition, the Fund’s income return reduced marginally in 2022, owing to the progression of properties moving into the development stage of their life cycles.

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Pension Irish Property Fund - Quarter 4 2022

The travails of 2022, triggered by the war in Ukraine in February, precipitated a decline in investment markets and a surge in inflation, due mainly to the rise in energy prices. Inflation peaked across the Eurozone at 10.6% in October. Equities suffered heavily in H1 (the ISEQ Index declined approximately 15% in these six months), characterised by significant falls in technology stocks.

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Pension Irish Property Fund - Quarter 3 2022

Property performance in the third quarter began to reflect the broader market decline seen across other asset classes throughout 2022, as higher interest rates, risk premia and the denominator impact were reflected in valuations through higher yields. The large portfolio held by the Fund reflected this adjustment; however, the annualised performance to the third quarter remained positive at +3.2%. This compares to a longer-term annualised return of +9.6% (10 years).

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Pension Irish Property Fund - Quarter 2 2022

Despite obvious challenges, the Irish economy has performed well through the first half of 2022. The ERSI anticipates GDP growth to be 6.8% for the full year, reducing to 4.8% in 2023. Strong export growth is driving these numbers. Modified domestic demand (a measure of economic activity that excludes certain types of activity such as intellectual property and aircraft leasing) for 2022 and 2023 is projected to be 4.4% and 3.3% respectively.

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Pension Irish Property Fund - Quarter 1 2022

The first months of 2022 have been marked by the tragic events that unfolded in Ukraine, dominating political activity, and unsettling the world economy. While it remains unknown how long the crisis will persist, some of the economic consequences have already been felt. In the US, headline inflation reached +7.9% in February and Eurozone inflation reached +7.5% during March. Since the Russian invasion of Ukraine, commodity prices have soared by 33.1% through Q1 with Brent oil +38.7%, European gas +84.2%, and wheat +29.9%.

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Pension Irish Property Fund - Quarter 4 2021

Despite the continued disruption and, indeed, uncertainty posed by the Covid-19 pandemic, inward investment into Irish property remained relatively high during 2021. Including forward purchases, €5.5 billion of turnover was recorded during the year; this makes 2021 the second highest year of trade on record. Several factors underpin this appetite, which is a global trend. However, Ireland’s relative economic performance and higher-than-average property returns persist and help maintain an active market.

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Pension Irish Property Fund - Quarter 3 2021

There has been a notable increase in the volume of investment in the Irish property market since the start of 2021. CBRE, the commercial real estate group, estimates that 2021 global investment volumes will be 23% higher than the previous year. To mid-September, up to €2.7bn in transactions had completed, and it is estimated that the 2021 annual investment volume will approach €4bn (which is an increase on the €3.6bn transacted in 2020). Investment activity continued to ramp up during the summer months and is it is expected that this will continue to gather pace throughout Q4.

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Pension Irish Property Fund - Quarter 2 2021

Irish property continues to be attractively priced on a relative basis, underpinned by a strong income yield. The prime office yield, for example, has remained stable at 4.0% since 2019, which compares favourably against other European cities, where yields have continued to compress. The all-property equivalent yield spread over 10-year German Bund, UK gilts, and US Treasury yields is also at a significant premium to the long-term average, reflecting an attractive return in the context of the source of capital underpinning the Irish property market.

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Pension Irish Property Fund - Quarter 1 2021

The final quarter of 2020 was relatively busy; supported by the lifting of travel restrictions, approximately €1.1 billion traded across office, industrial, residential, and retail sectors. Quarter one 2021 surpassed this and recorded approximately €1.2 billion of sales.

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Pension Irish Property Fund - Quarter 4 2020

During 2020, the property market, like the wider economy and most other industries, was severely disrupted by the Covid-19 pandemic. But the extent to which the virus impacted on the values and returns of property investments, while negative in aggregate, varied depending on property type.

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