Sunday 4 December 2016

Multi-unit deals continue as buyers look for tenants

Donal Buckley

Published 12/05/2016 | 02:30

Knight Frank is quoting €7.8m for 41 units at Xavier Court on Sherrard Street in Dublin
Knight Frank is quoting €7.8m for 41 units at Xavier Court on Sherrard Street in Dublin

More than €164m worth of multi home portfolios have been sold in Dublin in the first four months of the year. In all 877 units, ranging in size from one to three bedrooms, have been sold in the capital. That works out at an average price of €187,000 per unit.

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However some of these units are valued at more than three times that on the Property Price Register.

Many of them have been sold while occupied by tenants and this is proving popular with investors as it enables them to start generating rent as soon as the deal has gone through.

This contradicts the perception that portfolio sales require evictions. Allsop reports that over the past two years it has sold 900 tenanted dwellings and these accounted for about 41pc of its 2,200 residential property sales. Of the 900, more than one-third or 342 were apartments; 558 were houses.

IRES which has bought about 2,100 homes is quite happy to buy tenanted property. For example when it bought 442 apartments in Tallaght Cross West, Dublin 24, in the biggest deal so far this year, 88pc of the units were occupied.

The PPR shows that the 442 units were in fact valued at just below €64.1m. or an average of €145,000 per apartment.

IRES said it expects to increase the yield to 8.5pc by attracting tenants to the vacant 53 units. According to the latest Daft rental survey one and two bedroom properties in Dublin 24 are now generating gross yields of between 9pc and 10pc.

Nearby the sale of a portfolio of 50 apartments at Abberley Square, Tallaght, is expected to close shortly. Knight Frank had been asking €6m or an average of €120,000 for each unit. It has the potential for a €720,000 rent roll which, at the guide price, suggests an 11pc gross yield.

The second biggest residential property portfolio to sell this year was Nama's sale of Elm Park on The Merrion Road. It included 218 out of the 332 apartments in the campus as well as a terrace of eight luxury town houses, in addition to office and other facilities. The Property Price Register (PPR) shows that 118 of these apartments were in The Links section of the campus and these were valued at more than €39.95m. The register also shows that the units ranged in valuation from €111,000 to more than €1m each.

A further 71 units in The Bay, Elm Park, were valued at €12.02m. Most of these were valued at between €130,000 and €145,000 each.

Starwood and Chartered Land were reported to have paid a total of €183.47m for all of the properties including the commercial office blocks. DTZ Sherry FitzGerald and Savills acted for Nama while Colliers acted for Starwood.

Strong prices were also seen for a portfolio of 15 apartments at Cannon Place, Sandymount, Dublin 4, which sold for €7.1m in February and six of these were valued at €425,000 each with the most valuable ones valued at €625,000 each.

In 2014 Hibernia REIT acquired 12 two and three-bed apartments in a 22 unit apartment block at Cannon Place, as part of its acquisition of a Dorville-related portfolio from Ulster Bank. Hibernia's 12 were valued at the time at €6m or an average of €500,000 each.

Another strong price was seen this year when a private investor bought Abbeyglen, Cabinteely, in south Dublin for €10.5m. It comprises 44 apartments ranging from one to three bedrooms and including duplex penthouses. At the time of the sale 36 units were generating rents of €442,000. Agents Knight Frank had been quoting €8.5m. prior to the sale and Damien McCaffrey said that the rent roll could increase to €700,000 when eight units were finished and rents brought up to current market levels.

Its strong price reflected the fact that the purchaser would have complete control of the development and would also have the option of selling off either one of the blocks or individual apartments to get some of their money back.

Meanwhile on the north side of the city a development of 41 units at Xavier Court on Sherrard Street Upper, close to its junction with the North Circular Road in Dublin 1, has gone sale agreed recently for more than the €7.8m being quoted by Knight Frank. It was fully let.

Arranged in three blocks around a courtyard, the flats comprise eight one-bedroom, 21 two-bedroom and two units with three bedrooms as well as 41 basement car parking spaces. PPR shows it sold in 2013 for more than €4.74m.

PPR also shows that 22 apartments at City Square, Gloucester Street, off Pearse St, Dublin 2, were valued at €4.72m in a deal that closed in last month. The one beds were valued at €193,516 each and the two beds at €260,000 each. IRES announced in February that it had acquired 23 apartments, and a 57 sq m office suite at City Square, Gloucester Street, and 22 of the apartments were occupied.

In February IRES REIT also bought eight apartments at The Forum in Sandyford. The PPR shows that they came with a number of parking spaces and were valued at €259,200 each. Subsequent to that the PPR shows three other units in the Forum sold at prices ranging from €290,000 in March to €258,000 in April.

Also in February 11 flats at Russell Court, Feltrim Road, Dublin 24, sold for around €1.3m or almost €118,500 each.

In March this year 11 flats at Castlegrange Park, Castaheany, Dublin 15, sold for €1.81m. Most of these were valued at €160,000 each but one of them, No 42, was valued at €210,000.

Two deals were done at Rossan Court, Waterville Blanchardstown. In February 12 of these homes sold for almost €3.1m or an average of €258,333 each. Then in March eight more units sold for more than €2.17m or an average of €271,500 each.

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