Ireland beckons for Asian property investors
The speed of the turnaround has caught many by surprise as the market moves back into investors' sights
What a difference 12 months can make. A statement of the obvious for anybody in the business of real estate, but in Ireland this saying is particularly apt.
Many investors have been surprised at the speed of the turnaround in the Irish market, from a country synonymous with the "euro-zone crisis" to an area of interest for investors from both home and abroad. We have seen a revival in appetite for all things Irish - bonds, equities, loan portfolios, government paper and commercial real estate - with this demand escalating when Ireland formally exited a bailout programme towards the end of last year.
In the first half of this year, €1.37 billion (HK$14.5 billion) was invested in Irish commercial real estate, compared with €1.78 billion for all of 2013. But where does Asian capital fit into this equation? Well, on the surface it doesn't.
Less than 1 per cent of investment in income-producing real estate in the Irish market in 2013 emanated from Asian investors.
However, this is in contrast to hotel investment, where 13.5 per cent of the total in this sector last year came from Asia, the most notable being the sale of the Fota Island hotel in Cork in southern Ireland to the Chinese Kang family, who have since bought a second hotel in the area.
Much has been written about the increasing cross-regional flow of institutional capital from Asia, as finite prime assets and aggressive pricing pose challenges for investors seeking to expand portfolios within Asia. This has prompted some to seek opportunities overseas, with core assets in gateway cities the most sought after asset class.
Last year more than US$22.5 billion was invested outside Asia, mostly targeting prime international cities such as London, New York and Sydney. Asian investment into Europe last year was US$13.2 billion, up from US$6.3 billion in 2012.