Ireland’s investment market saw a 38% drop in the first quarter of 2022 compared to the same period last year, though interest from overseas is intensifying.

Despite an overall slump, the Irish market has begun to appeal to U.S. investors and larger institutions, with U.S. firms accounting for a third of all investment in the three months to the end of March.

The latest investment report from Savills Ireland found that a total of €761.5M had been invested in the property market over the three months from January to March 2022. It also stated that even though investment volumes have dropped significantly, they were still 9% above the long-term average of €700M for the quarter.

The sale of Irish REIT Hibernia to Brookfield and the negotiations over the Salesforce campus are signs that investor sentiment remained buoyant, with a total of 33 transactions in Q1 and an average value of €23.1M. This compares to an average quarterly transaction level of 46 and an average value of €17.6M.

“This reflects a trend in the Irish investment market of fewer sales but significant jumps in the average transaction value,” the Savills report noted. “The movement toward larger lot sizes stems from a greater concentration of institutional capital in the marketplace, which demand investments of scale in order to deploy capital.

Multifamily remained the largest real estate sector for investment at 31% of total investment share. Industrial space took the second spot, with 23%, and student accommodation third, with 19% of investment volumes.

Office investment stood at 10% of investment volume.

In terms of volumes, the average deal size within the multifamily sector in first quarter stood at €25.9M, 5.5% below that of the 10-year average of €27.4M, as fewer large transactions came to the market. However, the nine multifamily deals transacted in the quarter were the second-highest Q1 on record, behind only Q1 2021 when 13 transactions took place.

Logistics sales also stood out in the first quarter, with the €128.7M sale of the Primark distribution centre by Barola to Union Investment.

The top deal in the office market was the sale of The Forum in Dublin 1 to Spear Street Capital by Hibernia for €30.8M.