Thursday 27 April 2017

Investors splash €90m on shops and offices

Investors are estimated to have snapped up as much as €90m worth of shops and offices in the first three months of this year according to property agency Lisney.

The estate agents declined to elaborate on the specific deals included, except to say that AIB sales and lease back deals accounted for a number of the deals.

These include three branches at Navan, Castleblaney and Maynooth, which sold separately through agents CB Richard Ellis for a combined value of €8.8m, as well as other branches sold through Savills.

Two major Dublin commercial properties including office accommodation are believed to have been among the more valuable transactions.

It is believed that at least 11 of the deals were in Dublin, including an AIB branch in Capel Street as well as Boodles jewellers in Grafton Street, which was bought by a UK investor for €7.7m -- an initial yield of 6.35pc.

In addition, the Curstan Group paid €10m for eight units at The Parnell Centre.

Ann Marie Sheehan, director at Lisney's investment division, says that these recent deals compare to the €150m for the full 12 months of last year and says they indicate that yields have begun to stabilise. "That said, falling rental values continue to drive negative capital growth, albeit at a substantially more modest pace."

She expects the IPD returns for the first quarter to remain in negative territory, "but dips will be much less pronounced than experienced during 2008 and 2009".

Tentative indicators suggest that the bottom may be in sight.

After a correction of over 50pc, this will be a welcome reprieve.

Prices for four AIB properties, including the Dundalk branch which CBRE sold at the end of 2009, range between €1.15m and €4.6m and their initial yields ranged from 6.75pc to 7.35pc, which Lisney says highlights that demand lies in this price bracket but is very much predicated on covenant strength.

Ms Sheehan reckons that yields in the retail sector in Dublin range between 6.0pc and 6.5pc, those in the office sector between 7pc and 7.5pc and in the industrial sector between 8.25pc and 8.75pc.

"Pension funds and banks remain the dominant source of saleable product, with minimum supply coming from domestic private investors.

"It is unlikely that private vendors will emerge until it becomes apparent how NAMA propose to work through its loan book," she said.

Irish Independent

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