The Irish commercial real estate sector enjoyed a strong performance in 2019 and CBRE said it is confident of continued momentum in 2020.
In its Real Estate Market Outlook for 2020, CBRE said that investors continue to find diversification and
portfolio enhancing returns from the opportunities that the Irish real estate sector provides.
Myles Clarke, Managing Director at CBRE Ireland, said the new decade promises to offer challenges and opportunities in equal measure for the real estate sector.
"Interest rates remaining lower for even longer combined with equity volatility at elevated valuations will force further investor diversification in favour of alternatives. Real estate is positioned well to provide both yield and capital performance," he added.
In today's outlook, CBRE said that real estate returns are likely to continue to stabilise over the course of 2020 in line with an easing in global growth expectations.
It said it is expecting to see some high-profile investment trades in the Irish market this year but added that as trades are coming off record highs of over €7.2 billion in 2019, overall investment spend in the market here is expected to be somewhat lower than last year.
CBRE predicted that the office sector will continue to attract most interest in 2020 after accounting for 51% of investment spend last year, with investors encouraged by the strong occupancy rates and the ability to buy new stock.
The estate agents also said they expect to see increased appetite from Asian investors this year, with an increase in investors from Singapore and Hong Kong and a decline in appetite from Korean investors anticipated.
On the office market, CBRE said some of last year's leasing activity had not been signed off by the end of the year and so will provide a welcome boost to activity in the first half of 2020.
They also expect to see some indigenous location decisions that were put on hold in the latter half of 2019, most likely due to continued Brexit uncertainty, reigniting over the coming months.
The technology sector accounted for more than a third of activity in the Dublin office market last year and CBRE said it expects a shift towards a more balanced source of office demand this year with demand from financial services, business services and the public sector expected to increase during the next 12 months.
On the retail sector, CBRE said that as retailers focus on creating "experiential spaces" in order to attract and retain customers, they are likely to require fewer physical stores throughout the country.
"For this reason, the repurposing of some retail accommodation is going to become increasingly topical during 2020 and beyond," the estate agents said.
They added that although retail yields in the Irish market softened last year in line with trends across Europe, prime retail rents remained relatively stable and they are not expecting any significant change to prime rents in the Irish market this year.
CBRE also said it expect to see more Irish investors looking to deploy into the growing multifamily sector along with more European funds and some Asian capital also.
"For a sector that was deemed alternative only a few years ago, multifamily is now increasingly considered mainstream, with many investors encouraged by the attractive return profile from a sector that is generally less susceptible to cyclical movements over the medium to long term - a trait that is particularly attractive at this late point in the property cycle," CBRE said.
And on the hotel sector, CBRE is predicting a good pipeline of hotel properties to be formally offered for sale here this year, including some Dublin hotel properties.
According to CBRE's research, there are currently about 5,000 new hotel bedrooms under construction in Dublin city, of which about 2,200 are due to open for business during 2020.
"Despite the new supply that has come on stream in a relatively short period of time and the volume of construction that is underway in the Irish capital, CBRE believe that Dublin city centre is well positioned to effectively absorb new hotel room supply without significant market disruption," it added.