The main international buyers of Irish property have almost completely ceased their activity in Ireland in anticipation of further price drops, according to a new report by BNP Paribas Real Estate.

Investment in Q1 slumped 18% year-on-year to €625M, with U.S. investment falling to just €14.75M from a 10-year quarterly average of €213M.

There were no German buyers for the first time since Q1 2017.

In context, U.S. investors have purchased €8.7B of commercial and residential real estate between 2013-2022, while German investors have traditionally been the second-biggest foreign buyers, spending over €6B in the last decade.

As a result, international investors have dominated deals over the last decade, with domestic turnover falling from 55% in 2014 to under 14% last year, BNPPRE said.

What investment there has been has continued to focus on defensive asset classes such as residential, logistics and convenience retail.

“International investors remain confident in Ireland as an investment location, particularly because our demographic profile underpins strong demand for residential, logistics and certain forms of convenience retail property, including grocery stores and retail parks,” BNPPRE Director of Research John McCartney said.

“However, rising interest rates have triggered a reassessment of property values and, in a small market like Ireland, it takes time for an evidence base of transactions to bring vendors’ and buyers’ pricing expectations into alignment.”

The upshot of slowing rental growth and rising interest rates is that values are now adjusting downward.

“It is clear from our discussions with investors that Ireland remains an attractive investment proposition,BNPPRE Director of Investment Damien McCaffrey said. "However, it is also evident from these conversations, and from the sharp rise in the domestic share of investment, that further pricing adjustment has a way to go.”