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Investors ready to move after Covid storm abates


When travel restrictions are lifted, capital will flow back into commercial property, benefiting in particular the office, PRS, industrial and logistics and social housing sectors


Despite the fallout from the coronavirus pandemic, the quantity of international capital chasing opportunities remains extremely high. We estimate there is a wealth of unspent capital waiting to be deployed once travel restrictions are lifted.

When that happens, the key sectors to benefit will be office, PRS, industrial and logistics and social housing.

Q4 2020 has seen a significant number of new players preparing to enter the market. Many of these multifaceted investors are seeking core or core plus assets and in particular, those with an emphasis on added value.

A significant number have their own balance sheets and are ready to move quickly, due to from fallout from Covid-19 and the increase in the cost of debt.

Residential investment

We predict that social housing assets will be sold in 2021, thus determining the true value of the sector. And frankly, market transactions across this sector are well overdue. The investor appetite is there, vendors have spent the last few years packaging the product.

There are also a substantial amount of PRS schemes under development and in planning and that alone will ensure that this is a key sector in 2021. Again, this area of the market has shown no shortage of investor appetite at all levels over the course of the past year.

Industrial and logistics

This sector continues to be a greater focus for investors and this year proved largely resistant to the wider shocks of Covid-19.

Forecasts for industrial and logistics are positive and we see a strong occupier market underpinned by a shortage of accommodation, a rise of e-commerce and Brexit-planning. The main issue in this sector is the lack of scale to satisfy demand from buyers. As prime yields are 4.9 per cent we predict yield compression, in particular for the larger lot sizes.


The occupational office market remains in pause mode as the majority of large multinationals (particularly those in the tech sector) continue to adopt stringent work from home policies, which are likely to remain in place until Q2. However, the impact on the investment market is yet to be determined.

To date, the shortage of core product in the €20-€60 million price range has been the impediment to deals, rather than investor interest. The market will be keeping a close eye on what happens to the practical completion space that comes online in 2021 that is not already committed, in terms of change in rents, lease structures, incentives and so on.

We are seeing new entrants seeking non core, value add opportunities for offices thus creating healthy competition in this space, which naturally is well received by vendors.


We expect that retail will tread water. It has now split into food, household, furniture, DIY, etc, which vary in vulnerability to pandemic-led restrictions. Retail Parks are holding up reasonably well because they can socially distance. Mainstream comparison retailing will struggle, especially if there is a third lockdown.

By now most landlords have cut “blend and extend” Covid-19 deals. However, worse is to come. Leases from 2004-2008 that have 15 and 20 year breaks (and there are a lot of them) are approaching the endgame. As the break dates approach many retailers are finally able to cut deals to defer these breaks but also cut rents by anything from 15 to 50 per cent.

Moreover, those retailers are committing to maximum ten-year terms from now on, and only on really affordable rents that are well below current contracted rents. Cuts will be by anything from 10 to 40 per cent.

We expect that within the next five-to-seven years most of our comparison retail real estate leases will be substantially turnover related and will have multiple (typically three-year) breaks.

Food store and DIY leases, for example, will be more valuable as they are Covid-19 resistant and leasing terms will be longer and more structured (in line the Consumer Price Index, for example).

It will be interesting to see how the debt market views three-year breaks, although these are typical across main European cities.

From an investor perspective, the appetite for retail is almost non existent, however its true to say the market has not been tested for shopping centres and retail parks.

2021 investors

Primarily due to travel restrictions, there were no Korean buyers in 2021, however we expect this buyer pool to re-emerge in 2021. It is one which typically likes single lease, core assets worth €100 million plus.

Furthermore, we are seeing an increase in overseas buyers setting up offices here, to asset manage existing stock and to source new opportunities. We also expect off markets deals will continue to be a feature of the market going forward.

Michele McGarry is a director and head of capital markets at Colliers International

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Michele McGarry

Director | Head of Capital Markets


Acknowledged Investment marketplace expert with extensive experience in the Irish investment market.

Currently representing a number of domestic & international investors (including Funds, Property Companies & Private Equity Clients) seeking investment & development opportunities from €1M - €500M+.


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