The Irish property investment market recorded turnover of €3 billion last year despite the Covid-19 pandemic, according to new figures released today by property company Lisney.
Lisney said that while this was half the previous years' record-breaking €6 billion, supply was more limited from April onwards as several potential sales processes were put on hold.
Today's report shows that office space was the most active in the investment sector, at 39% of total turnover due to some very substantial buildings sold.
The office market had been earmarked to have another good year in 2020 and with strong demand, it had started well with almost 90,000 square metres of accommodation transacted in the first quarter of 2029.
But the impact of Covid-19 took its toll and with only about 52,000 square metre of transactions completed in the remaining nine months of the year, the market found itself in "hibernation" mode, Lisney said.
Lisney noted that flexibility was already creeping into the working week before the pandemic, but it now seems likely that some staff in certain sectors will work remotely one to two days a week in the future.
"On the surface, this might imply that 20% to 30% less space will be required by businesses as hotdesking on days in the office becomes the norm," the company said.
But Lisney also said that people have become accustomed to greater personal space in the last nine months and in open plan offices, desk space sizes and distances from colleagues may grow due to personal preferences.
"We anticipate continued demand in 2021 as there are already some notable requirements in the market. Big tech companies will continue to power market demand," Lisney said.
"The roll-out of the Covid 10 vaccine should see a return to busier office occupancy rates - however, it will be towards the end of the year and into 2022 before activity reverts to healthier levels," it added.
International travel restrictions did have an impact on overseas investors seeking opportunities during the year and Lisney predicted that this will continue to for at least the first three months of this year, if not the first six.
Lisney also said that Industrial property was the most resilient sector of the commercial property market, with domestic and international demand in the sector very strong.
On the residential market, Lisney said that the market stalled from the middle of March as potential purchasers could not physically view properties and were relying on virtual viewings. 50% fewer homes were sold in April and May compared to the same time in 2019.
"Certain sellers were nervous and accepted reductions, keen to conclude sales. Generally, any revisions to prices were between 5% and 10% less," Lisney stated.
Lisney said the first and second half of 2021 will be different.
"In the short-term, supply will remain the key issue, and combined with pent-up demand and good market sentiment, prices will likely hold firm," it said.
"As the year progresses and a vaccine is hopefully rolled out in stages, vendors will become more confident. Those holding off selling will move to put their properties on the market, but it will take time for stock levels to build up," it added.
The estate agents said that purchasers will remain sensitive to asking prices during 2021.
"For vendors, properties quoting realistic asking prices from the start of the sales process will garner the greatest attention. Likewise, damage will be done to purchaser interest in homes quoting over-priced figures," it stated.
"Any change in Dublin residential prices in 2021, positive or negative, will be linked to the economy, employment and consumer confidence," it added.
