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Positive trends for Irish hotel market ahead – CBRE

CBRE's Outlook 2025 report forecasts a strong year for the Irish hotel sector, with stable transaction volumes and growing interest in purpose-built hostels, despite pressure on room rates from new hotel supply

Developers and investors are beginning to recognise the gap in the Irish market for purpose-built tourist hostels

Commercial property specialists CBRE today released its comprehensive Outlook 2025 annual report, containing its predictions for each sector of the Irish property market in the year ahead. 

The property consultants highlight how the market is at the start of a new cycle for investment and development, as ECB interest rates continue on a downward trajectory and asset valuations have stabilised across all sectors.  

Hotel sector

Nearly €900 million worth of Irish hotel transactions were completed in 2024, making it the strongest year for the market since 2006. Transactional activity will remain strong this year, with a similar level of transactional volumes forecast for the market in 2025.

The Morrison Hotel has been placed on the market in Q1 with a guide price of between €90-95 million.

While occupancy rates in Dublin remained strong at more than 80% in 2024, average daily room rates (ADR) declined marginally and are likely to come under further pressure in 2025 as 1500 hotel rooms are due to open in 2025.

Despite a decline in average room rates from €179 to €174 last year, average daily rate still remains 20% higher than pre-pandemic room rates.

Developers and investors are beginning to recognise the gap in the Irish market for purpose-built tourist hostels.

The sale of Jacobs Hostel in Dublin 1 to Azora Group for a price reported to be more than €45 million completed this year while ‘Clink’, a 600-bed hostel opened on Abbey Street.

Firethorn Trust and SW3 also recently acquired a development site at Sackville Place with planning permission for a 588-bed hostel. There have also been a number of sites granted permission for the development of tourists hostels at Macken St., Foley St., and Chancery St.

 Retail sector

Leasing momentum across both the high street and shopping centres was healthy in 2024, with notable brands such as Alo Yoga, Kiko and New Balance entering the Irish market. Grafton Street vacancy remains low with just seven vacant units, while the vacancy rate in shopping centres nationally is just 5.4%.

Rising operational costs weighed on the Food & Beverage sector in 2024 and resulted in a spate of restaurant closures throughout the country. An increase to the National Minimum Wage, the introduction of the Auto-Enrolment Pension Scheme and the end of the Debt Warehousing Scheme are just some challenges faced by restaurateurs.

The reinstatement of a 9% VAT rate for non-accommodation-based hospitality will offer some respite, however.

In commenting on the report, Colin Richardson, director & head of research, CBRE, said: “Despite the ECB’s 2% inflation target proving more stubborn to reach than anticipated, it is expected that European interest rates will continue to tick down in the year ahead.”

“CBRE Ireland are now calling yields as stable for all sectors under our coverage, while the MSCI Ireland Index of total returns turned to positive territory in Q3 last year following 8 consecutive quarters of negative returns. All indicating that we now at the start of a cycle of for investment where we can expect asset valuation growth over the coming years.”


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