The Irish real estate market saw an infusion of €25.5 billion in financial capital last year, marking a 6% decrease from the €27.2 billion noted in 2022, as stated by Sherry FitzGerald. The real estate company highlighted this occurrence was in spite of the substantial increase in borrowing costs throughout much of year, demonstrating the resilience of demand in the residential sector. The €25 billion total originates from residential property investment involving individual assets and bulk sales, as well as expenditure on commercial property, taking into account agricultural and developmental land.
The firm specified that residential investment including all kinds of market operations, accommodation for students and residential investment, formed almost 90%, or €22.9 billion of the total, an amount nearly similar to the previous year. On the contrary, financial capital infused into commercial properties involving all commercial property operations, land development sales of €1 million or more as well as those involving agricultural land, saw a significant reduction of 41% to €2.6 billion.
The estimation from Sherry FitzGerald reveals that Dublin experienced a decline in its capital flows to 46% in 2023, totalling €11.7 billion. This trend shows a decrease in both commercial and residential expenditure. Conversely, Cork and Galway saw a surge in capital poured into commercial property over the year, and residential expenditure in these areas rose as well. Cork was responsible for the largest slice of capital flows outside of the capital city at 10%, or €2.5 billion.
“While the total capital moving into the property market only dipped slightly in 2023, the downturn in the commercial sector was particularly harsh due to the rise in borrowing costs damaging yields and affecting the viability of developments,” said Sherry FitzGerald’s head of research, Jean Behan. “The office sector’s recession, an essential part of the commercial market, has considerably influenced the flow of commercial capital. Construction costs’ heightening and persistent postponements in the planning process have compounded the effect of increased borrowing costs in the development land market.”