Investment market turnover expected to reach €3 billion exceeding 2024’s figure, housing supply unlikely to improve in Spring 2025 selling season while BER’s are now a key consideration in residential and commercial sectors

  • International confidence remains strong in Irish residential market with overseas buyers active at the upper end of the market and Asian buyers seeking to invest

 

  • Demand for country homes and castles driven by international cash buyers – a mix of Irish returning from abroad and internationals seeking to buy second home

 

  • Grey space fell by 15% in Dublin and office vacancy rates have stabilised as workers return

 

  • Demand will be greatest for sites with viable residential planning permissions this year to avoid lengthy delays, costs and risks involved in achieving a finalised planning grant

 

  • First time buyers made up almost 60% of the new homes market nationwide last year

 

The investment market is expected to improve in 2025, surpassing 2024’s total of €2.4 billion and reaching €3 billion, according to a new report from Lisney, Ireland’s largest independently-owned multi-disciplinary property advisory company.

 

Distressed sales, coupled with falling interest rates and the formation of a stable Irish government, will greatly assist in the recovery of the investment market. French, German and other European investors, along with North American buyers are expected to be active in the market, as well private Irish investors, who generally are seeking lots up to €5 million.

 

The Lisney Outlook 2025 report also states that despite demand remaining strong in the Irish residential market, housing supply is unlikely to improve in the upcoming 2025 spring selling season, with buyers focused on their desired lifestyle, particularly living close to the sea.

 

BER is also a key priority in both the residential and commercial sector, with ‘green mortgage’ rates on offer for properties with a rating of B3 or higher. Landlords and developers in the office and industrial sectors are seizing opportunities to improve the energy efficiency ratings of their buildings through refurbishment.

 

Lisney has highlighted the absence of bridging finance in the market for over a decade, emphasising how it creates a catch-22 situation for would-be sellers waiting to trade-down and right-size their housing requirement. The introduction of short-term funding by non-bank lender ICS Mortgages last October was a positive step towards addressing this challenge, and Lisney remains optimistic that more lenders, particularly the pillar banks, will expand such offerings in 2025. While bridging finance alone cannot resolve supply constraints, it is one of the many factors that will assist.

 

In 2024, first time buyers made up almost 60% of the new homes market nationwide and will again be active during 2025. Although the government has pledged to extend schemes like the Help-to-Buy and First Home Equity Scheme, Lisney recommends a review of the €500,000 threshold in Dublin, which is pushing buyers out to surrounding counties.

 

Development wise, land turnover was approximately €370 million in the Greater Dublin Area in 2024 which will be emulated in 2025. Demand will be highest for sites with viable residential planning permissions with the public sector through Land Development Agency, Local Authorities and approved housing bodies expected to be the key purchasers of land in 2025.

 

In Dublin’s office market, grey space decreased by 15% over the course of 2024 as vacancy rates stabilised, driven by an increase in employee contact days at the office. While many of the major tech giants remained absent from the market, smaller tech companies were active. However, the market is mainly being driven by the professional services sector.

 

A full breakdown of the key sectors contained in the Lisney Outlook 2025 report is outlined below, while the full in-depth report can be accessed here: https://we.tl/t-sVwWkFLnGE

 

 

RESIDENTIAL – DUBLIN:

The Dublin residential market was exceptionally busy in 2024, a trend that will continue during 2025. Demand will remain unwaveringly strong across all parts of the market and with unrelenting supply constraints, prices will increase further – although the pace will be slower than the almost 11% growth last year.

 

Other key insights include:

  • Costal properties in Dublin expected to experience significant demand in 2025

Lifestyle decisions will be a critical factor in 2025, with properties along the coast in Dublin expected to experience significant demand and will achieve premium pricing compared to the general market in 2025.

 

  • Buyers are seeking turnkey homes

Homes in turnkey condition or only needing decorative work will be the most sought after again this year. Similarly, energy efficiency remains important to buyers, with ‘green mortgage’ rates on offer for properties of B3 or higher.

 

  • International confidence remains strong but upcoming spring selling season will not bring significant increase in housing supply

International confidence also remains strong and overseas buyers will be active at the upper end of the market, with Asian buyers in particular seeking to invest in the perceived strength of the Irish market. Throughout 2024, there were approximately 3,500 second hand homes for sale in Dublin at any given time (and even fewer entering January 2025 at sub-3,000). It is unlikely that upcoming spring selling season (March / April) will bring any significant increase in supply – as was the case in Autumn selling season last year where the traditional bounce of about 30% in properties for sale in September did not materialise.

 

 

RESIDENTIAL – CORK

  • Prices expected to increase following on from an average growth of 6% last year

Trends in the Dublin market also follow through to the Cork market. The property market in Cork will continue to be active with prices expecting to increase – following on from average growth of 6% last year. Compared to other markets nationwide, Cork’s new home sector is extremely busy with new homes often achieving significant premiums. In the 12 months to October 2024, almost 30% of all sales in Cork were newly constructed properties, nationwide and in Dublin, the average was 24% and 25% respectively.

 

 

RESIDENTIAL – COUNTRY HOMES & CASTLES

  • Demand for country homes and castles will be driven by international cash buyers

Demand for country homes and castles in 2025 will continue to be driven by international cash buyers making lifestyle choices. They will be a mix of Irish returning from abroad (many that moved in the 1980s and had successful careers in the US, UK and Europe), but also citizens of other countries seeking to buy a second home in Ireland.

 

At the start of 2025, there were only 26 country home properties outside of County Dublin with asking prices above €2.5 million publicly available on the market, the majority of which (62%) were in Wicklow, Meath and Kildare. This is well below the level of supply of country homes and estates that is required to meet demand.

 

 

RESIDENTIAL – NEW HOMES

  • The new homes market will remain busy in 2025 with strong buyer sentiment outstripping supply

In 2024, first time buyers made up almost 60% of the new homes market nationwide, an average of 47% in the last 10 years. First time buyers will continue to be active as they seek to exit the rental market or living with family, and avail of government initiative such as Help-to-Buy and First Home Shared Equity schemes. Lisney welcomes the Programme for Government pledge to extend the schemes until 2030 but strongly recommends a review of the €500,000 threshold, which is quickly becoming inadequate in Dublin and pushing more buyers out to surrounding counties.

  • Deficits in infrastructure will be a key market constraint in 2025

A key market constraint that will remain in 2025 will be deficits in infrastructure – water, wastewater, drainage, power and transport connections. This will have an impact on the industry’s ability to deliver housing at scale, particularly considering the higher targets now in place, and was one of the reasons for lower completion figures in 2024.

 

  • Lack of new apartment schemes as a result of high construction costs

Despite the demand, there are only a limited number of new apartment schemes for sale that are available to owner-occupiers, in many cases this is due to substantial increases in construction costs in recent years (+35% to 40%).

 

 

DEVELOPMENT LAND

  • Demand will be greatest for sites with viable residential planning permission

In 2024, development land turnover was approximately €370 million in the Greater Dublin Area, which will be emulated in 2025 with incremental increases in activity. This will be in spite of the established challenges around high construction costs, planning delays and finance remaining features of the market. Demand will be greatest for sites with viable residential planning permissions (both greenfield and brownfield).

 

  • Supply will continue to improve both on and off-market offerings in 2025

While supply has been constrained in recent years, there will be continued improvements in both on and off-market offerings in 2025. This will come from various types of vendors, including those under pressure from funders, those selling due to an inability to develop-out schemes because of higher cost, and others because of zoned residential land tax. The public sector through Land Development Agency, Local Authorities and approved housing bodies will be the key purchasers of land in 2025.

 

  • Construction costs will remain high but stable in 2025

In terms of new scheme viability, there will be both positive and negative factors at play. Construction cost inflation should stay relatively stable this year, but costs will remain 35% to 40% more than pre-pandemic. Funders will remain cautious around development, meaning cash purchasers will be in a strong position.

 

 

INVESTMENT

  • Irish property investment market to improve greatly during 2025

Lisney predicts that the Irish property investment market performance will be much improved in 2025. Having fallen by 135 bps in H2 2024, ECB interest rates are forecast to fall by a further 115 bps to 2% over the course of 2025. This, along with the formation of a stable Irish government, will greatly assist in the recovery of the market.

 

  • French investors will remain active buyers

Demand will come from a variety of sources but will evolve as the year progresses. French investors were very dominant in the market last year and will remain active buyers, along with some new French entrants and other European investors, with German buyers likely to make a larger impact towards the latter half of the year as they are generally not first movers. Certain North American buyers were active last year and Lisney predicts they will be back in greater numbers during 2025. Private Irish investors (generally seeking lots up to €5 million) have been buyers in the last number of years and will remain so in 2025, however, greater amounts of stock will be required to fulfil their demand. Irish funds will also be active.

 

  • Distressed sales will increase this year in the office sector

Lisney predicts that distressed sales will increase this year, with certain investors now in breach of their loan-to-value covenants with funders and not in a position to refinance. This will be most prevalent in the office sector where certain large lot sized properties have experienced between 40% and 60% loss in value. For the market overall, Lisney predicts continually improving supply as the year progresses, with more on and off-market opportunities materialising. This will come from distressed sales but also from vendors that were waiting for improvements in the market.

 

  • 2025 turnover expected to reach €3 billion

2025 market turnover is expected to exceed 2024’s figure of €2.4 billion, and is expected to reach €3 billion. This however will be contingent on what comes to the market from distressed sources. Sustainability will remain a key factor in all decisions and pricing and, to date, it has impacted the office market to the greatest extent. However, with improvement in the occupational sector and with values having been hit hard in recent years, Lisney predicts we are nearing a low point for many office buildings in terms of pricing.

 

 

OFFICES

  • Grey space and office vacancy rates have stabilised

While hybrid working continued during 2024, many staff had a greater number of days in the office. The amount of grey space (sub-lets) stabilised as did the vacancy rate, and while most of the tech titans were absent from the market, other smaller tech companies were active, but professional services companies drove the market. Sustainability remains a major focus as well as the ever-increasing gap between buildings fulfilling ESG criteria and those that are not.

 

  • Market activity will improve in 2025 but lack of supply in the medium term could be a challenge

Market activity in 2024 was just under 200,000 sqm of take-up and remains about 16% below the 10-year annual average and 40% below the very strong years of 2017, 2018 and 2019. Approximately 110,000 sqm of space was reserved at the beginning of 2025, and Lisney expect activity levels to improve this year. However, in the more medium term, this will likely settle around 230,000 sqm to 250,000 sqm per annum. This is a realistic market size for Dublin, but the lack of new supply in the medium term could undermine this.

 

  • Law firms will be most active in the market

The demand profile in 2025 will be similar to 2024 at a high level. Last year, professional services firms were most active in the market as some of the larger accountancy practices took new accommodation. Lisney predicts that this year, professional services will again be most active, but law firms will ultimately take the lead as the Irish legal sector continues to undergo change through mergers and acquisitions.

 

  • Although quantum stock remains double pre-pandemic level, supply constraints will emerge towards the end of 2025

The rapid increase in supply that began in 2020 / 2021 stabilised in 2024, with the vacancy rate falling one percentage point between January and December. Despite this, the quantum of stock available remains double its pre-pandemic level with close to half comprising top grade stock that was built in recent years. Although this appears to provide occupiers with plenty of options, Lisney predicts pockets of supply constraints emerging towards the end of 2025. This will relate to new, top quality accommodation that meets the ESG criteria and is located in prime CBD of D2 and central D4.

 

  • Rental terms will improve for landlords of well positioned city centre buildings and key business parks in H2 2025

As 2025 progresses, rental terms will begin to tighten in favour of the landlord. While rents will remain generally stable over the year, rental terms for newer quality buildings in prime city areas will improve.  Similarly, Lisney predicts that voids and rental terms will improve heading into H2 2025 for landlords of well positioned business parks.

 

  • Development funding for speculative schemes will remain tight

220,000 sqm of accommodation remained under construction entering the New Year, 93% of which is in the city centre and 40% already pre / mid-let. Completions will reach 47,000 sqm this year with the remainder due in 2026. Despite the reductions in interest rates, development funding for speculative schemes will remain tight and Lisney predicts between one or two new starts in 2025 – most likely towards the end of the year.

 

To capitalise on future demand, Lisney predicts some landlords and developers will decide to proceed with extensive refurbishments of Grade C or lower Grade B buildings, bringing them up to a BER of A or high B.

 

INDUSTRIAL AND LOGISTICS

  • Lack of supply and suitable accommodation will be a challenge in 2025

The industrial and logistics market will remain active in 2025, with demand and activity levels more in line with longer term trends. As a result of constraints around supply, slower construction completions and historically low second-hand availability, take up in 2024 was under 200,000 sqm, about one third below long term average. The 30-year annual average take-up figure is 275,000 sqm and Lisney predicts a similar level of activity in 2025. The main challenge however will continue to be supply and lack of suitable accommodation.

 

With the Dublin vacancy rate sub-2%, supply continues to be a key constraint in the market. Encouragingly, several substantial buildings (combined around 70,000 sqm) are due to reach practical completion in the opening months of 2025.

 

  • Demand will be strong along the M1 corridor towards Northern Ireland

Lisney predicts that strong demand will come from 3PL operators and individual retailers as well as pharma and medical. A lasting trend in 2025 will be certain 3PL operators with contracts in Ireland and the UK continuing to review the Irish market as a hub for both locations. Lisney predicts demand will continue along the M1 corridor towards Northern Ireland for such operators.

 

  • Smaller scale owner occupiers may consider buying as repaying a mortgage could cost less than rent

Lettings have made up between 80% and 85% of all space transacted in the last five years with vacant possession sales accounting for just 15% – 20%. Lisney predicts that lettings will continue to dominate the market in 2025, but with interest rates trending downwards, smaller scale owner occupiers may consider buying as repaying a mortgage is likely to be less than rent.

 

Lisney predicts that speculative new buildings will remain slow to start in the months ahead. However, as development finance improves and investment yields harden, the risk profile will be less, and greater volumes of new buildings and refurbishment should occur.

 

  • Sustainability will be key in this sector

Sustainability will continue to be a priority in this sector with new and refurbished buildings seeking LEED Gold and other certificates. Lisney predicts that green lease clauses will be common practice as investors seek to make good on their ESG promises and meet EU and domestic policies, particularly around finance. For existing older stock, landlords are actively seizing opportunities to improve the energy efficiency ratings of their buildings through refurbishment particularly when they become vacant – a trend Lisney expects to continue in the longer term.

 

 

RETAIL

  • Vacancy rates drop in Dublin City Centre with international brands opening stores

Lisney predicts that demand will remain healthy in 2025, with new and expanding retailers active on prime high streets, as well as in some shopping centres and retail parks. The changing face of Dublin City Centre’s prime high street core continued in 2024 as several international brands opened stores including KIKO Milano and Alo Yoga. Taking stores undergoing fit out at the end of 2024 as occupied, the vacancy rate on Grafton Street was 6.4% (down from 7.7% 12 months ago), while Henry Street / Mary Street was at 12.9%.

Retail rents and letting deals remained mixed in 2024, however, Lisney does not predict any significant increase in rental values in 2025. Experimental retail has been on the rise for several years across a variety of outlet types, all focused on creating an enjoyable customer experience through the use of technology. Lisney predicts further growth in this space during 2025 with the leisure and entertainment industry ideally positioned to take advantage of this.

 

 

HEALTHCARE

  • Nursing home closures will persist in 2025, particularly in rural areas

Within the nursing home sector, occupancy levels will remain high in 2025. The supply / demand imbalance however will continue to be a challenge as the Irish population ages. Larger operators are forecasting marginal improvements this year as they continue to emerge from a protracted period of difficult operating conditions albeit short term forecasts remaining well below pre pandemic levels. Viability issues will persist for smaller / family operated centres with many of these centres built prior to the mid 2000’s and not conductive to modern nursing home requirements.

 

Lisney predicts that nursing home closures will persist in 2025, the number of which may depend on the incoming government’s policies and funding of the sector. According to Nursing Home Ireland (NHI), operational costs have grown by 36% in the last five years while revenue has only grown by 17%, resulting in a significant funding gap. 77 nursing homes (2,800 bed spaces) have closed since 2018, including 11 centres in 2024. Many of these closures have been in rural areas which Lisney predicts will continue in 2025.

 

PURPOSE-BUILT STUDENT ACCOMODATION

 

  • New supply lagging behind strong demand from Irish and international students

In the 2023 / 2024 academic year, there were almost 266,000 students enrolled in Higher Education Institutions with 206,400 of these in full time education. Since 2016 / 2017, student numbers have grown in Ireland by 17.9%. The number of international students has also jumped by 63.4%. Despite the growth in student population, which is likely to grow by a further 20% in the next five years, demand will remain extremely high and affordability will be an challenge for many domestic students.

There was a change to the operation structure of the sector in last year with operators banned from enforcing a 51 week student lease and ensuring that tenancy agreements are based on a 41 week academic calendar. In the next academic year and beyond, larger operators with multiple schemes are likely to segregate blocks into either 51 week or 41 week lets. The more centralised blocks will fall into the 41 week category and operators will target the tourism market during the summer months.

 

CORK

Investment: Lisney predicts turnover in the Cork market to grow this year, but this will be contingent on what comes to the market, particularly larger lot sizes. Lisney also predicts greater activity from international capital, particularly French.

 

Development Land: Similar to other parts of the country, Cork will experience the greatest demand for sites with viable planning permissions in 2025. Several notable residential land sales transacted in Cork’s metropolitan area last year, mainly with the benefit of planning permission. This compares favourably to the previous year when there was only one notable ready to go sale.

 

The new homes market is very active in Cork as a proportion of total sales, the county is the strongest for new home sales in Ireland. Lisney predicts that this will spur on further improvements in 2025, particularly if the mismatch in pricing between some buyers and sellers close.

 

Offices: For the overall Cork office market, the vacancy rate fell just below 12% in 2024 (it had been close to 15% previously). There is less than 5,000 sqm of grey space accommodation available in the Cork market with three months average take up. Lisney does not expect this to change greatly during 2025.

 

Industrial: Despite strong demand in the Industrial sector last year, Cork’s activity levels were substantially down on the previous year and on the longer term trend. Take up continues to be greatly impacted by lack of supply. The vacancy rate is 1.7%, well below what is required for a functioning market. There is approximately 50,000 sqm under construction across several schemes with planning permission but these have not yet commenced.  While some of this will provide supply for the short term, it will not fully provide what is required.

 

Retail: The vacancy rate on Patrick Street was 17% at the end of 2024 and 9% on Oliver Plunkett Street – a reduction from 20% and 10% respectively in 2024. Penneys is due to commence its €60 million expansion on Patrick Street this April which will be positive for Patrick Street and the city centre as a whole.

 

David Byrne, Managing Director of Lisney, said:

“After four years of navigating a confluence of challenges that fundamentally reshaped the real estate landscape, 2024 marked a turning point, bringing greater stability and visibility to the markets we operate in. With the cycle of interest rate increases drawing to a close and inflation returning to more sustainable levels, the commercial real estate sector is experiencing renewed momentum.

 

Ireland’s resilient economy, underpinned by robust growth in technology, pharmaceuticals, and financial services, continues to attract investment, reinforcing the country’s reputation as a stable and attractive destination. However, the ongoing housing supply constraints remain a critical issue, impacting talent retention and relocation, particularly in high-demand sectors like hospitality, construction, and technology.

 

Looking ahead to 2025, we anticipate further growth in key segments of the residential market and a sustained push towards sustainability, which will shape the future of the Irish property sector. Embracing innovation and sustainability is not just an obligation but a strategic opportunity to foster resilient, low-carbon economies while meeting national and global climate goals.

 

The transformative impact of AI will also play a pivotal role in reshaping the real estate sector, enhancing decision-making and client interactions while reinforcing the enduring value of human judgment and expertise.

 

With greater stability on the horizon, 2025 presents significant opportunities for those prepared to seize them. We are committed to delivering best-in-class advice and partnering with our clients to navigate these exciting times and achieve success in the year ahead.”

 

Aoife Brennan, Senior Director of Lisney , says:

“The Irish property market is influenced by a number of factors, from geopolitical shifts and technological advancements to evolving environmental policies. Recent elections across the globe, including the U.S. Presidential and European Parliament elections, will shape key policies impacting Ireland, particularly in areas like housing, taxation, and the green transition.

 

Domestically, the new government’s ambitious programme aims to tackle Ireland’s housing supply challenges, setting higher targets and addressing infrastructural deficits while promoting competitiveness, sustainability, and economic growth. These initiatives, alongside the implementation of the Planning & Development Act 2024, are expected to alleviate bottlenecks and improve market conditions in the coming years.

 

In 2024, we saw signs of recovery and stabilisation across many sectors. Interest rates began to decline, construction costs levelled off, and sustainability practices became more integrated into the property market. While challenges like planning delays and supply constraints persist, there is growing optimism for 2025.

 

The commercial property market, particularly office and industrial sectors, is poised for greater activity as demand improves and investors return. Meanwhile, demand in the residential market will remain unwaveringly strong and with unrelenting supply constraints, prices will grow further.

 

We remain optimistic about the opportunities 2025 will bring across all sectors, driven by improved demand, renewed investor confidence, and the resilience of Ireland’s real estate market.”

 

Lisney offers clients a full-service property offering across both the residential and commercial markets. Operating for almost 90 years, the business employs 125 people in a range of agency and advisory services departments across offices in Dublin, Cork, and Belfast. The commercial division of the business operates under the Lisney name, while the residential division operates under the Lisney Sotheby’s International Realty brand.

 

With a highly-qualified internal research team and a database of market information dating from 1960, Lisney provides insightful and reliable advice for its investment, financial, developer, and occupier clients. In addition, Lisney also publishes periodic reports featuring leading assessments and analysis of market trends and performances. The depth and quality of research and advice available to clients has led to repeat business and client relationships that have passed through generations.

For more details about Lisney, visit www.lisney.com

You can also follow Lisney on Twitter: LisneyIreland and Linked In: Lisney Ireland