Market Insights
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Pension Irish Property Fund - Quarter 2 2024
There has been a notable increase in investment activity in Q2, following a subdued start to the year in Q1. There was €514m invested across 29 deals in the quarter, including 40 Molesworth Street, an office property majority leased to DLA Piper, sold to Deka (a German investment manager), which was the first transaction of a prime office property for some time. The sale price of €37.5m reflects a net income yield of 5.16% and a rate per sq. ft. of €1,120. This was a particularly important piece of evidence for valuers of office stock, the values of which had moved significantly following the rise of interest rates. The uptick in activity is encouraging, and sits well beside an improving macro environment, as inflation continues to abate across Europe, and the European Central Bank (ECB) made its first interest rate cut in June 2024, with further interest rate cuts expected to occur before year end. While transaction activity increased in Q2, it is important to note that the market is still recovering, with initial estimates for Q2 trending 49% below the long-term annual average.
- Property Quarterly Reports
- 27.08.24
Pension Irish Property Fund - Quarter 4 2023
The steady rise in European Central Bank (ECB) interest rates from July 2022 (0.0%) to September 2023 (4.50%) led to a contraction in investment activity into property, which is heavily reliant on debt financing and investor sentiment. This perpetuated a rise in valuation yields across all property sectors, having a negative impact on values. The MSCI All Property Ireland Index equivalent yield moved out 1.0% in the 18 months to December 2023, from 5.5% to 6.6%. The spread of property yields to government bonds therefore improved by 0.73% to 4.3%, thereby increasing the relative attractiveness of property yields.
- Property Quarterly Reports
- 22.03.24
Pension Irish Property Fund - Quarter 3 2023
Investment turnover in Ireland amounted to €444m in Q3, a similar quantum to recent quarters, but notably down on the long-term quarterly average of €1.1bn. The year-to-date (YTD) turnover of €1.4bn is not anticipated to reach €2bn for the full year. This pronounced decline in transaction activity is in line with broader European and global trends. Globally, investment volumes declined 54% year-on-year during Q2.
- Property Quarterly Reports
- 23.11.23
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
- Property Quarterly Reports
- 01.08.23
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.
- Property Quarterly Reports
- 10.02.23
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).
- Property Quarterly Reports
- 10.11.22
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.
- Property Quarterly Reports
- 04.08.22
Pension Irish Property Fund - Quarter 1 2022
The first months of 2022 have been marked by 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 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%.
- Property Quarterly Reports
- 27.04.22
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.
- Property Quarterly Reports
- 31.01.22