Transaction activity in the Irish commercial property market slowed considerably during the second quarter of the year, according to Sherry FitzGerald.
The estate agent said this reflected the continued rise in borrowing costs since mid last year.
The figures show just 26 transactions closed, bringing turnover for the three month period to €333 million, one of the lowest quarterly levels on record.
For the first half of the year, capital spend reached €985 million, less than half that seen for the same period in 2022, and similar to the level recorded during the first half of 2020 when the pandemic impeded market activity.
"In line with expectations, the rising borrowing cost environment has played its part in muting investor activity in the Irish commercial property market during the first half of the year," said Jean Behan, Senior Economist, Sherry FitzGerald Research.
"This is particularly apparent in the size of transactions during the period with 58% in the €1 million to €10 million cohort.
"Only 11% of transactions exceeded €50 million, well below levels seen in recent years. Notably almost all of these took place in quarter one," she added.
The figures show that residential assets remained the key driver of investor activity accounting for 43% or €427 million of total capital spend during the six-month period.
The retail sector is experiencing an uplift in investor interest with a further 20% or €199 million of capital invested in this asset class. Capital spend in office assets remained relatively weak equating to €130 million or 13% of total capital transacted.
Similar to previous years, Dublin continued to attract the largest share of investment turnover during the first half of the year at 69%.
The regional centres of Galway and Cork each accounted for 4% and 3% of total investment turnover respectively.
Overseas investors remain key players in the Irish market accounting for at least half of all capital transacted during the period.
Today's analysis states that investor activity is expected to remain subdued in the short term as interest rate uncertainty persists.
