LONDON, July 11 (Reuters) - Real estate investors will triple spending on Irish commercial property this year, in a bet the country’s tentative economic recovery will gather pace, research showed on Thursday.
Total sales are likely to exceed 1.5 billion euros ($1.9 billion) versus 576 million in 2012, property consultant Savills said.
It would be the highest amount since 1.8 billion euros in 2007, before the global financial crash sent values plunging by up to half in a country that, together with Spain, suffered Europe’s worst property crash.
Some investors have said they see value in Irish real estate.
“After steep falls in property values, Ireland is now one of the highest-yielding markets in the developed world,” said David Skinner, real estate chief investment officer at Aviva Investors , which owns 28 billion euros of property in Europe.
“Irish real estate looks attractive for long-term investors with a moderate risk appetite.”
Euro zone policymakers have hailed Ireland as a success story versus other bailed-out countries such as Greece and Portugal, where political instability and biting austerity measures are hampering economic growth.
Ireland is due to exit its EU/IMF bailout programme later this year and is targeting growth of 1.3 percent in 2013, though the country said last month it had slid back into recession.
Its patchy recovery has not dented overseas interest from companies like Deutsche Bank’s property arm, JPMorgan and AXA Real Estate, who are chasing a relatively small number of high-quality properties in the capital Dublin.
Under pressure from investors to find high returns, some say Dublin looks a good bet versus safer but lower-yielding markets like London, Paris and Frankfurt.
Yields, or the annual rent as a percentage of the property’s value, for the best Dublin offices are about 6.25 percent versus about 4 percent in London’s West End, one of Europe’s most in-demand markets.
Tenant demand is also on the rise and Dublin office rents rose in March for the first time since the financial crisis. Helped by Ireland’s low corporation tax rate of 12.5 percent, companies like Google, Facebook and Ebay are driving demand.