Investment in Irish commercial property totalled €430 million between July and September, new figures show.
The data from estate agent Sherry FitzGerald shows that this was up 25% on the previous quarter.
However, it says capital spend remains well below the long-term average for the third quarter of €788 million.
It said the value of transactions in the development land market was also well below average for the third quarter, reaching €82 million - unchanged from the previous quarter.
Since the beginning of the year, investment turnover in Irish commercial property totalled €1.4 billion, a drop of 64% on the €3.9 billion recorded for the first nine months of 2022.
During the same period, the value of land sold for development purposes reached €226 million, approximately half that recorded for the same period the previous year.
"Given the current 22-year high in interest rates, it is no surprise that activity levels have been hindered in both markets," said Jean Behan, Senior Economist at Sherry FitzGerald Research.
"Additionally, the robust inflation in wholesale building and construction costs has compounded the issues, affecting the feasibility of developments and dampening forward fund and forward commit structured investments," she added.
The data shows that the volume of transactions in both markets so far this year was down by just over a third compared to the same period last year, with 57 development land sales and 91 investment sales closing during the period.
It said this would suggest that 2023 looks set to be one of the weakest years on record in both markets.
It added that the impact of the high borrowing cost environment was also evident by the relatively low volume of higher valued transactions in both markets compared to previous years.
In the development land market, only 2% of all sales since the beginning of the year were valued at €15 million or greater, while in the investment market only 9% of acquisitions were €50 million or greater.
Despite this, Sherry Fitzgerald said the development land market continues to see strong interest for sites with residential development potential.
"The current climate has created opportunities for investors seeking value which will be particularly attractive to those with capital to refurbish or upgrade older stock," said Ross Harris, Director of Commercial & Residential Investment at Sherry FitzGerald.
"Meeting ESG objectives remains a key component of investment decisions with both investors and occupiers focused on energy efficiency and reducing their carbon footprint.
"This will continue to underpin demand going forward, buoyed by the increased availability of green loans offering favourable terms," he added.
