Commercial property specialists CBRE have released their comprehensive Outlook 2023 annual report containing their predictions for each sector of the Irish property market in the year ahead. The property consultants say that Ireland’s property market performed better than expected in 2022, despite the impact of rising inflation, interest rate increases and a slowing European economy.
2022 showcased the Irish hotel market’s strong recovery due to the return of tourism and business travel following the pandemic and increased demand for emergency accommodation.
Rising input costs, particularly in the form of energy prices and wage inflation, remain a significant concern for occupiers in 2023. Four and five star hotels have little room to manoeuvre in the short-term to adapt their offerings to these changes, while budget hotels may prove to have more flexibility.
On the demand side, recessions internationally risk dampening visitor numbers, while on the supply-side, in addition to very limited construction activity in the sector, there are concerns that many of the hotels brought into the emergency accommodation system are unlikely to return to use in the ordinary hotels market, further reducing supply.
Despite these concerns, 2023 will see more new faces among occupiers and investors who continue to be attracted by Ireland’s strong underlying fundamentals. Ongoing pedestrianisation plans in Dublin are making the city a more attractive destination for tourists, while several major events hosted in Dublin will bolster demand in 2023.
Office leasing volumes increased year-on-year, albeit activity still remains below pre-pandemic levels and the long-term market average. Retail leasing activity has turned a corner and the vacancy rate on Grafton Street is now down to just six units, with this expected to fall further in 2023.
Speaking at the launch of the 34th edition of their annual Outlook report, Myles Clarke, managing director at CBRE Ireland said, “While we will likely face some headwinds in 2023, the underlying long-term constructive outlook for the Irish economy continues to attract occupiers and investors from around the globe. Our growing population, its youthful profile, and our continued success in attracting overseas foreign direct investment are all factors which reinforce the need for an ever-expanding built environment. While the market is now adjusting to higher funding rates, and this transition period can be challenging to navigate, we have continued to see deals transact, which is a healthy sign of the market’s resilience”.
A link to the virtual presentation is here: https://cbre.qumucloud.com/view/ZowZZVNBBcxGzTYoQiKZWB