Introduction

The Irish real estate sector has faced numerous challenges in recent years due to inflation, interest rates, changing occupier trends, climate impact, and government policy changes.

However, 2025 brings a sense of clarity and potential opportunities, with stabilisation in commercial real estate values and expectations of interest rate cuts and rental growth.

What is the current outlook for the Irish economy?

The Irish economy is performing well with a favourable medium-term growth outlook. However, domestic challenges include capacity and infrastructure constraints due to population growth. The multinational enterprise (MNE) sector remains vulnerable to external shocks.

• The Central Bank of Ireland (CBI) projects GDP growth of 4.2% in 2025 and 4.5% in 2026. Modified Domestic Demand (MDD), a key indicator of true economic growth, is also expected to grow but at more subdued rates.
• The labour market supports economic expansion, operating at nearly full employment with 2.8 million employed in Q3 2024, a 3.7% increase from Q3 2023. Employment growth is expected to continue at reduced rates of 2.4% this year and 2.2% next year. Gross disposable income per household is forecast to grow by 1.8% in 2025 and 1.7% in 2026.
• Disinflation is progressing as expected, with prices (HICP) projected to rise by 1.7% in 2025, down from over 9% in 2022. The European Central Bank (ECB) has been easing interest rates, with the refinancing rate at 3.15%, down 135 bps annually. The ECB expects inflation to settle around the 2% medium-term target, suggesting further rate cuts this year.

Key Takeaways from the Irish Real Estate Outlook 2025

Sector Analysis Explainer

Key Considerations for Investors

1. Focus on next-generation, smarter, and greener facilities.
2. Adopt a long-term growth horizon.
3. Target markets with a healthy balance of supply and demand.
4. Engage in active asset management to add value during the hold period.

The Irish economy continues to perform well, and the growth outlook over the medium-term horizon is broadly favourable.