A report from estate agents Savills shows that €381.5m was invested in the Irish market in the second quarter, down 34pc on the second quarter last year.
But total spend in the first half of 2025, at €924m, was 27pc higher year-on-year.
John Ring, director of research at Savills, said real estate markets have struggled for momentum in the absence of a clearer and more stable economic backdrop.
Savills still expects the value of deals this year to exceed the €2.5bn recorded in 2024.
Savills said the second-quarter performance reflects a smaller number of big transactions, but that overall activity remains “well-diversified” across sectors and geographies. It added a total of 21 deals closed in the period, with an average size of €18.1m.
Investment in the retail sector remained strong, accounting for 42pc of total activity in the second quarter. It was supported by Realty Income’s €123.5m acquisition of the Trinity Collection, a portfolio of retail parks in Tallaght, Drogheda and Clonmel.
Offices continued to command the highest share of activity, at 47pc by value.
The quarter was marked by three big deals, including Deka’s €70m purchase of 20 Kildare Street from Kennedy Wilson, with a 5.15pc yield.
Kennedy Wilson also sold 10 Hanover Quay for €66m to Pontegadea, representing a 5.4pc yield. The Infinity Building in Dublin’s Smithfield was acquired for €42m by Corum, for an 8.4pc yield.
Recent moderation in the five-year swap rate will allow transaction volumes to recover
European investors made up 53pc of all purchases in the second quarter, well above the five-year average of 34pc, according to Savills.
“Increased sovereign bond issuance across the euro area and concerns over the potential inflationary impact of US protectionist trade policies have led investors to demand a higher term premium, keeping upward pressure on longer-dated bonds,” Mr Ring said.
He said with rates at the short end of the yield curve tightening due to ECB rate cuts, the five-year swap rate has moved from an average of 2.8pc in the first half of 2024 to 2.2pc in the first half of 2025.
“While higher rates and an uncertain macro context have led to a fall-off in investment volumes, the recent moderation in the five-year swap rate will allow transaction volumes to recover.”
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