Unfinished housing estate sells for twice guide price
An unfinished housing estate sold for €1.95m or almost double its guide price at a recent auction reflecting the strength of demand for these types of properties around the country.
The latest development to sell comprises 28 complete or partially-complete units and 21 undeveloped sites all on a 4.8 acre development site at Glenatore, Coosan, Athlone, Co Westmeath.
Auctioneer Des O'Malley of Cushman & Wakefield and Sherry FitzGerald had been guiding €990,000 for the property and sold it under the hammer for €1.95m. He has auctioned a number of such estates around the country in recent times and says that some medium-sized developers have been bidding on them.
"Some well-located estates have sold well thanks in part to rising house prices. However values have not increased across the board. It depends on the local authority and their approach to the bond," he says.
If a local authority insists that the purchaser pays up the monies due under a bond entered into by the original developer then this can make such estates less attractive for completion and depress the value.
Increased completion rates for unfinished estates were reflected in recent figures published by the Department of Housing which show the numbers of units left unfinished after the crash, has fallen from a high of about 33,000 in 2010 to 2,838.
The figures comprise complete and vacant units and near-complete units.
But the benefits for house supply are also further enhanced by the sale of unfinished estates. For instance the buyer is likely not alone to finish and sell the unfinished units but also to develop sites on the estate where nothing has yet been built. Indeed the profits may well be in the unfinished sites as the sale of the uncompleted units may offer the opportunity to quickly pay off loans raised for the acquisition of the estates.
Another Athlone property was bought by a local business for around its €475,000 guide price prior to the auction. This modern warehouse on Grace Road, is located a short distance west of Athlone town centre and extends to 2,242 sq m (24,133 sq ft) and the sale includes an adjacent 1.19 acre site.
Also in the Midlands, a multi-let investment property Unit 1, Kealew Retail Park, Portlaoise, Co. Laois, sold for €405,000 or €75,000 over its €330,000 guide. It is currently generating €46,970 in rent from three retail tenants which suggests a gross initial yield of almost 11.6pc. This 1,674 sq m (18,018 sq ft) property is located on a prominent corner of the retail park which itself is about 1km from Portlaoise Town Centre and about 4kms from the M7 Motorway allowing access to Dublin, Limerick and Cork.
The 757 sq m (8,148 sq ft) ground floor retail area is occupied by Expert Electrical, Dohenys Homecare and Inspiring Interiors. Its first floor retail area extends to 750 sq m (8,073 sq ft) and is occupied by Doheny Homecare. A roller shutter door provides loading access directly to the first floor display area. A storage area is connected to the property by a yard and is currently used by Expert Electrical.
An investment property at 15 Dublin Street, Carlow Town sold for €250,000 or €25,000 over its guide price and with a rent of €27,500 per annum, this suggests a gross initial yield of 11pc. Located on the corner with Brown Street, the high-profile commercial premises is currently let in one lot on a four year, nine month lease from April 2014. Extending to three floors over basement, it is in good condition and benefits from a Georgian doorway.
Demand for unfinished one-off houses in Wicklow was seen with the sale of Kilacloran, Aughrim, for €246,000 or €86,000 over its guide. The bungalow-style residence standing on 2.3 acres extends to 197 sq m plus attic space.
In all the auction on May 4 generated 11 sales with a combined value of more than €3.7m.
At its next auction on May 24, Cushman & Wakefield Sherry FitzGerald will offer 17 lots including a number of investment and development properties in Munster.
The most valuable lot will be a ground floor retail investment extending to 532 sq m (5,726 sq ft) at 38 O'Connell Street, Limerick's high street. With a current rent of €150,000 a year and a €625,000 guide price, this suggests a gross yield of 24pc.
The high-profile ground floor unit is occupied by the Marco Polo Italian restaurant and is let to Z-We-Ton Limited under a 21-year lease from November 2011.
In the Cork City suburb of Ballincollig, a retail investment at Unit 7 at Westpoint, Link Road, with a €240,000 guide price offers an 8.33pc initial gross yield. It is let to a Polish grocery, To Tu Super Cena, on a four-year 11-month lease from June 2014.
The current rent is €20,000 per annum and will increase to €25,000 at the end of year four.
Two office units are for sale at South Bank, Crosses Green, off Washington Street, in Cork City Centre. One of these no. 16, has a €150,000 guide price.
While it is currently sub-let to University College Cork at a passing rent of €26,500, the tenant has indicated that it will not be renewing after its expiry in July. The three-storey office building extends to 1,400 sq. ft. and comes with two parking spaces.
Nearby 30 South Bank, is a vacant ground floor 600 sq ft self-contained office premises with one parking space and a €100,000 guide price.