Wednesday 26 October 2016

International buyers prompt surge in multi-family sales

Published 21/02/2016 | 02:30

Nearly 800 apartments at Beacon South Quarter were bought by IRES Reit in 2014. IRES has been a huge buyer of “multi-family” properties.
Nearly 800 apartments at Beacon South Quarter were bought by IRES Reit in 2014. IRES has been a huge buyer of “multi-family” properties.

The appearance of big investment firms from overseas on the Irish property scene over the past few years has helped push sales of apartments and other "multi-family" homes to more than a tenth of the total number of property sales - believed to be the highest proportion on record.

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New research from Savills shows that multi-family blocks accounted for 11.4pc of all property sales in Dublin since 2012.

The research shows that a total of 47,838 housing units were sold in Dublin between 2012 and 2015. Of those 5,467 were traded in blocks of multiple units. The total number of multi-family blocks that traded during this period was 54 and the average number of units per block was just over 100.

While some blocks have been bought by wealthy individuals and consortia, the majority have been purchased by large institutional investors such as Kennedy Wilson Europe and Marathon Asset Management.

Savills director of research John McCartney commented: "Corporate investors were quick to spot the mismatch between dormant construction output and continued population growth.

"They correctly interpreted that this would lead to lead to increases in rents and capital values and took the opportunity to buy up vacant blocks early in the recovery cycle when confidence was still shaky," he added.

While private equity companies led the way at the start of the multi-family activity in Ireland, institutional investors such as IRES Reit and, to a lesser extent, Hibernia Reit are now getting involved.

Generally, the buyers of these properties aim to deliver a premium product with a range of tenant amenities such as games rooms, gyms, cinema rooms, concierge facilities, 24 hour security and event nights.

According to Savills head of new homes David Browne, the nature of the multi-family market is beginning to change.

"After the crisis vacant apartment blocks were available to buy in their entirety and this suited institutional buyers.

"However, as these have been bought-up, entirely vacant multi-family blocks have become scarce. While some investors are still prepared to take fractured ownership in these properties, the mainstream of this market is moving more towards a design-build-operate model where investors build their own assets from scratch with a view to holding these properties as long-term investments"

New multi-family development currently underway in Dublin includes Kennedy Wilson's construction of 166 units at Central Park in Sandyford in addition to 196 new units at Clancy Quay.

The biggest buyer of multi-family properties has been IRES Reit, which has built up a portfolio of more than 2,000 homes - mostly apartments - in the past two years. The firm is now the biggest private landlord in the country.

Last week IRES chief executive David Erhlich warned investors that the Government's "rent certainty" measures would hurt the company's bottom line in the months ahead.

Sunday Independent

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