Irish tycoons back buying property – but only in the capital
The superwealthy flashing the cash again could be a sign the domestic market has bottomed out, writes Roisin Burke
Published 12/05/2013 | 05:00
IF artful market trackers like Bernie and John Gallagher, the couple that dodged the property crash bullet, are back buying Irish property again, that's surely a bellwether.
Wealthy Irish investors and Irish institutions are both back on the prowl in a big way. Having spent €165m last year, according to figures from Savills, Irish commercial property spend in 2013 looks likely to be considerably more, as billions worth of Nama and Irish Bank Resolution Corporation assets and loanbooks get flogged.
In total €2.5bn worth of property deals are expected to be done in Dublin and it won't all be international vulture funds or loaded Russian industrialists and Israeli tycoons splurging.
Man-band star John Gallagher (his band Dakota 66 has played Electric Picnic to muted acclaim) and his Doyle dynasty wife Bernie were underbidders for the Harcourt Building, which recently sold for €28m. They will come back for more, we're told. The golden couple splashed €13.3m for Temple Chambers in Ballsbridge a few months back, buying it from ex-Treasury man Johnny Ronan. They also lately bought Cork's River Lee Hotel, price-tagged at €25m, adding it to their upmarket Doyle Hotel chain.
Smart people who didn't get wiped out in the boom appear to be calling the bottom of the Irish market. Commercial rent returns rose for the last few quarters and international investors are swarming Ireland, so maybe they're right.
"Anything that comes up in the Harcourt Building region, underbidders will have a look at," Adrian Trueick of HT Meagher O'Reilly predicts. The Gallaghers are not the only ones with cash to splash at this level, even in these blighted times.
The coup by beef magnate Larry Goodman in buying the Bank of Ireland Baggot Street building for €43m left some other rich individuals wanting.
Wealthy Mayoman Charlie Kenny is believed to have lost out to Goodman on the BoI block tussle. He is now said to be seeking out other opportunistic buys in that €40m-€50m ballpark, we're told, with his son Conor making the approaches.
Kenny, who owns Jersey-based Clancourt Holdings has interests in office and retail premises and forestry and leisure.
Revving up to spend also is Porsche-driving Jamie Rohan, the socialite son of Wicklow multimillionaire Ken. He has serious money to spend and interest in buys, with "a strong cash position", it is understood. Rohan is thought to have looked at the Pembroke Road office building that sold for €15.5m last week and may bid for city-centre office stock in the region of up to €20m.
Rohan and others have been subject to overtures from international funds, as has developer Christopher Bennett. Having retired from Bennett Construction, the Mullingar company that fitted out Ebay's Dublin HQ for €8m in 2011, he has partnered with Oaktree Capital, with some of his money and Oaktree's substantial firepower forming a team to watch closely.
Facebook landlords Ellier Developments are chasing at least one significant acquisition. Led by Chris Jones and Francis Rhatigan, the Dublin house builders are thought to have €20m cash to spend in the top commercial sphere.
Ellier looks like it may have escaped before the bust, having built several well-known residential estates in Dublin that closed before 2006. Ellier rents Facebook Ireland its current HQ at Hanover Reach, round the corner from Google.
Penneys' owner Primark recently bought Independent News & Media's former home on Abbey Street for €6m – a quarter of what it was once worth – and the controversial retail powerhouse may look at other acquisitions, including outside the capital.
Appetite is very heavily Dublin city-based, HT Meagher O'Reilly's Adrian Trueick says. "Demand outside Dublin so far is far more limited, although the return potential may make the risk worth it in the future."
Very few big players are actually looking beyond Dublin city, but the billionaire Comer brothers are a notable exception. The former plasterers from Galway are also among the few seeking to get into residential buys, targeting apartment blocks, having spent around €20m on apartment complexes in Santry and Blanchardstown, both Dublin, and a block in Galway last year and over €16m on at least one block in Cork last week.
They've been linked with bidding for David Kennedy's €70m Clancy Quay apartment complex, in Dublin, being marketed by Savills.
Luke and Brian Comer were also eyeing Palmerstown House estate and golf course, formerly owned by Jim Mansfield and controlled by Nama, but they didn't buy the €12m price-tagged prospect.
The brothers, who made their cash mainly through savvy property punts in Britain, have ample money to spend and are actively looking, but they have been in the market for around two years without making a significant play – so far.
Also said to be looking at bidding on Clancy Quay is Frank Fahy, who either cannily or luckily unloaded most of his Shannon Homes housing stock before the property market collapse.
Perhaps even more telling than the monied Gallaghers and Comers and Goodman coming out to flash the cash is the ultraconservative Irish investment fund contingent getting back in the game.
Irish Life is actively shopping around, its main focus being the office market in Dublin city centre, and IPUT (the Irish Property Unit Trust), which has already shelled out €57m on A&L Goodbody's IFSC offices, has more to spend.
"IPUT will bid on investment properties for sale with a likely spend of more than €50m," one agent said.
Some Irish moneybags are managing to get skin in the game while keeping below radar. It's thought that the Davy-led buy of the €28m Harcourt Building could be followed by its representing Irish clients on big deals.
Another entity believed to be representing monied clients is the little heard-of Ardstone Capital. Led by Donal Mulcahy and Donal O'Neill, it bought AIB offices in Ballsbridge for €4.75m in March. Ardstone is "actively pursuing other opportunities", O'Neill said after the buy.
O'Neill and Mulcahy are former property investment executives from Friends First during an era when it had €750m under management.
With investments in Germany and Britain, Ardstone claims to have avoided the property crash and boasts €3bn of managed assets in Europe. It is predicting that there will be more than €2.5bn worth of Irish property deals this year.
Aside from the Gallaghers, the Comers and the Goodman superwealthy, private money is more generally looking at plays in the €1m-€5m range, while anything above €5m tends to be international money or institutions, Trueick says. "The quantities of the right stuff is the issue."
From both the wealthy private investor and fund viewpoint, eyes will be on 46 Grafton Street, where there's a locked-in lease with telecoms giant Hutchison and a price tag of €5.5m is sought by Trueick's firm. Further up the street CBRE is seeking €3.8m for two adjoining vacant units.
Apart from the plummeted property prices yielding perceived bargains, the other draw for wealthy types is the poor value of having money sitting around.
"The real driver is that there is little to earn as interest rates drift down and down," says Trueick. "And rents are beginning to improve.
"There's quite a bit of demand from small private investors and quite a bit of money about," he added. "It's such a sea change from 12 months ago."