Free cookie consent management tool by TermsFeed Policy Generator

Conor Whelan – Market review 2022 & outlook for 2023.


Continued inflation and rising interest rates mean pricing expectations will need to adjust across most real estate sectors next year, writes Conor Whelan of QRE. However, once this is accepted, the market is in a position to function well.


On the face of it, this is another very strong year for the Irish investment market.

Investment turnover to Q3 2022 in Ireland is in the order or €4.8 billion and is expected to comfortably exceed €6 billion by year-end.

However, it must be noted that these numbers include the sale of Hibernia Reit for €1.1 billion, which was a share purchase deal, and the sale of Salesforce Tower for approximately €550 million.

These numbers also include almost €1.5 billion of spend in residential/PRS investment, leaving about €1.75 billion of investment spend on commercial property in the year to date.

We entered 2022 full of optimism, in the hope that Covid-19 was finally behind us. The invasion of Ukraine quickly followed in February, a terrible event on every level and with a significant global economic impact.

When we travelled to the MIPIM property conference in Cannes in March, there was a lot of uncertainty about the impact that Ukraine would have on the global economy. By the time we travelled to the Expo in Munich in October, it was clear that real estate investment decisions of the large institutional buyers were being put on hold.

It will be interesting to see how this will affect investment market performance for Q4, which is traditionally the strongest quarter of the year.

We expect that an adjustment will be required across the majority of real estate sectors in 2023. High inflation coupled with rising interest rates are currently making it very difficult for vendors and purchasers alike to value commercial property and, in particular, development land.

Coming from an office background, I have watched developments in that sector post Covid-19 with interest and I still feel that the market is being impacted by hybrid working.

Office take-up in Ireland this year is likely to be in the order of 2.2 million square feet, which will be down somewhat from our record year of 4 million square feet in 2018.

With staff still working from home it is difficult for corporates to plan their real estate strategies, and we have seen a number of large office acquisitions either being put on hold or cancelled in 2022 due to uncertainty about occupancy levels and increased fit-out costs.

This is likely to have an impact on the valuation of the office investment sector in the near future, though we expect prime buildings with excellent ESG credentials to be broadly unaffected.

Office rental values have not yet been impacted and indeed there is evidence of rental growth in prime city locations for the best product.

With EU corporate sustainability reporting now a focus for businesses with 500-plus employees, sustainability and staff amenity is increasingly becoming a decisive factor in the market and we expect the gap between prime and secondary buildings to widen in the coming years.

On a positive note, the indigenous sub-€20 million investment market (a barometer of the domestic investor) performed very well YTD in 2022. The statistics up to Q3 show 90 transactions in the sector and a spend of almost €625 million, with an average lot size of €6.9 million.

These numbers are in line with 2016 and 2017 levels, which were strong years for this sector of the market based on our own research.

This is due to the large pool of cash-rich investors which are still looking for returns. Assets purchased at a discount some years ago have now undergone asset management, been tidied up and are performing.

These are attractive investment vehicles for these cash buyers seeking an alternative to bank interest. In the majority of such cases, assets are bought using cash and then refinanced. Again, it will be interesting to review Q4 statistics to establish if this trend has continued to year-end.

We are cautious but optimistic about the commercial property market in 2023.

If there is acceptance that an adjustment is required in price levels, our market is in a position to function well. Ireland is still a very attractive place to invest in and there is a considerable amount of new funding waiting to be deployed.

This is a view shared by all of the institutional buyers we have met in 2022.

Based on the level of valuation work we are carrying out, there also remains a good appetite to lend from the various sources available in Ireland, albeit on a more cautious footing. ESG is a hot topic and there is a lot to understand and do in this space before 2030.

Conor Whelan is the managing director of QRE Real Estate Advisors

written by Conor Whelan

December 2022