Recovery in Ireland, Spain and Italy is gathering pace at different speeds, with Ireland leading the way. Over the past year fears of a eurozone split have receded greatly. Of the three countries GDP growth is expected to be strongest in Ireland over the next five years, at 2.4% p.a., followed by Spain at 1.7% p.a. and Italy at 1.1% p.a..
In the medium Dublin is expected to show the strongest commercial property rental growth across Europe, and for all sectors (office, retail and industrial). The recovery in the Irish property market is evident not only in the growth in employment and the tightening of bond yields, but also in the composition of the investor base. Private equity firms are already well established there, while sovereign investors are beginning to actively seek opportunities in the market.
In Spain and Italy interest from opportunistic investors has increased. Many investors appear indiscriminate in their choice of assets. We suspect that pricing is made on the basis of aggressive assumptions on rental growth and yield compression.
Source : DTZ (Groupe UGL)