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Thursday 18 September 2014

Property firesale is attracting investors to buy up Ireland Inc

Foreign businesses and wealthy exiles are getting stately homes, land and hotels on the cheap

Published 04/05/2014 | 02:30

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Liberty's John Malone and (inset) Humewood Castle, the 19th-century Gothic mansion on 450 acres in County Wicklow
Liberty's John Malone and (inset) Humewood Castle, the 19th-century Gothic mansion on 450 acres in County Wicklow

FOREIGN investors are hoovering up blue-chip Irish properties, from stately homes, golf courses and five-star hotels to prime commercial real estate that will produce a river of rental cash for 100 years.

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The phenomenon of wealthy individuals and investment funds picking up gilt-edged properties at huge discounts continues.

They are hunting for value – and they are getting it. Some loan portfolios have been snapped up at bargain basement prices representing 25c in the euro from the 2008 market peak.

Stately homes surrounded by prime agricultural land that once reached €25m in the boom have been bought for between €5m and €7m.

And at the lower level, some Irish farmers have been outbid by their young former neighbours, who fled the country after the crash and are now buying up houses and land near their home place while still making good money in Canada, Australia, the US and the UK.

They are buying now so they can come home later.

But who are the people and financial entities who see post-crash Ireland as a land of opportunity – a chance to build up a significant portfolio of property at the bottom of the market?

They can be roughly divided into three main cohorts; super-wealthy, foreign-based individuals who are chasing choice legacy properties; international hedge and property investment funds seeking long-term value and rental returns; and Irish people at home and abroad with the means to buy now while prices remain attractive.

"Experience in 2013 suggests this trend is continuing, if not increasing, with the US buyer being crucial," David Ashmore, head of country home sales at Sherry FitzGerald, said.

And that avalanche of foreign money includes a number of mercurial business people who see value here, sometimes spurred on by sentiment.

They include John Malone, the 74-year-old Connecticut-born billionaire philantrophist and chairman of Liberty Global, who made his money from telecommunications.

Mr Malone is now America's largest individual landowner, with 2,100 acres of prime land in the US state of Maine.

Now he also owns Humewood Castle at Kiltegan, Co Wicklow – a gothic pile that sits on more than 425 acres just 90 minutes from Dublin city centre.

For Malone, who was allegedly nicknamed 'Darth Vader' by former US vice-president Al Gore because of his hard-nosed business methods, the purchase of Humewood Castle is a labour of love.

He said in one interview that he bought it after it "captured my wife's fancy".

Malone said: "We call it our green banana project because at our age, you don't buy green bananas. It's going to take a number of years to get it restored."

But it also represents great value. During the boom the property changed hands for €25m. Mr Malone bought it for between €7m and €8m.

The Irish-American businessman has also, along with a group of friends, bought the 195-room Trinity Capital Hotel in Dublin for around €35m.

Another wealthy American investor is Jim Thompson. It was his heart as much as his head that led him to snap up the Woodhouse Estate near Stradbally, Co Waterford.

The founder of the Crown Worldwide Group bought the Georgian pile and some 330 acres of land not far from where his Irish ancestors once worked in mining.

He told Bloomberg: "As I look out my window at the river, the grass and the trees, it's a nice place to be. I was mesmerised.

"There are 10 bedrooms. Even the bathrooms are quite huge: you could have a small party in the bathrooms if you wanted."

At one stage, the asking price for the house, its lands and its 150,000 trees was some €11.5m, but Mr Thompson paid around €7m for the property.

Other investors were born on this island, but made their money abroad.

Neville Isdell, a native of Downpatrick, is best known as the man who helped resurrect the Coca-Cola brand where he was once chairman and chief executive.

Now he is the owner of the CHQ building in the heart of the IFSC, which has already undergone something of a rebirth since he snapped it up for a bargain price to keep him busy in his retirement.

The Dublin Docklands Development Authority (DDDA) spent €45m refurbishing the CHQ before it was re-opened in 2007.

Last year Mr Isdell bought it for some €10m.

"I had thought about buying something in my homeland, but this wasn't an emotional decision. Now is the right time to buy in Ireland," he explained.

"I had never thought of taking on something like this, an operating company. But this is a special building," he said in one interview.

CHQ was originally built as a tobacco store, with vaults beneath to store wine and designed by Scottish engineer John Rennie.

Charles Noell, a billionaire businessman from Baltimore, who co-founded the private equity firm JMI Equity, bought the Ardbraccan estate near Navan, Co Meath for some €5m. It was built in the mid-1700s as the palace of the bishop of Meath.

Mr Noell plans to breed bloodstock on the 120 acres of prime Meath grassland that surrounds the palladian-style house.

Russian Yelena Baturina paid €22m for the Morrison Hotel, Dublin. She is reputedly Russia's richest woman, with a personal fortune of more than €1bn.

The Malaysian owner of Queens Park Rangers football club, Tony Fernandes, reputedly paid €2.5m for the former Ormond Hotel and adjacent buildings on Dublin's quays.

Investment funds have also struck quickly where they see value. Property investment group Hibernia REIT bought New Century House in the IFSC Dublin for €47m, while American Bill McMorrow – who heads up Kennedy Wilson, an international investment fund – bought up loans from a number of iconic buildings, including the Shelbourne Hotel.

Starwood Capital teamed up with Key Capital to buy €200m of loans. The portfolio includes the garda offices at Harcourt Street, four Superquinn stores and various sites in the IFSC.

Brehon Capital Partners, along with Swiss investors, bought the former Ritz Carlton at Powerscourt, Co Wicklow.

The German investment fund GLL paid about €40m for 102-104 Grafton Street, one of the country's prime retail sites and home to blue-chip tenants River Island and Wallis.

Sunday Independent

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