Little value left in buying costly Dublin hotels - iNua
Too much competition among buyers means purchasing a hotel in the capital is no longer a good investment, according to the head of one of the country's biggest hotel buyers.
Speaking at a Crowe Horwath/DTZ hotel industry briefing in Galway, Noel Creedon, head of Cork-based specialist investment firm iNua, said his firm will not buy any properties in the capital despite building up a €20m warchest for hotel acquisitions earlier this year.
David O'Connor, a director and shareholder in GM Asset Management which recently bought the South Court hotel in Limerick, echoed his remarks.
A flood of investors eager to capitalise on Ireland's economic and property market recovery have seen hotel prices in the capital climb steadily in the past two years. Several world-famous names have bought into Dublin hotels in this period including Kennedy Wilson, who acquired debt attached to the Shelbourne, and US billionaire John Malone, who was part of the consortium that bought the InterContinental (formerly the Four Seasons). The next major Dublin hotel to go up for sale is the Gresham on Dublin's O'Connell street.
There is still exceptional value to be found in hotel purchases outside of Dublin, Creedon said. INua has bought four outside the capital in the past two years - the Radisson in Limerick, the Radisson in Little Island, Kerry's Muckross Park (previously owned by Jackie Lavin and Bill Cullen) and the Hibernian in Kilkenny for a combined spend of €32m. They would cost over €100m to build from scratch, Creedon said.
His comments were supported by the findings of a new survey of hotel owners by consulting group Crowe Horwath.
Some 96pc said they feel there is still value in new hotel purchases outside of Dublin; just 72c saw value in the capital.
"The survey found that there is a much greater perception of value in hotel purchases outside of Dublin" said partner Aiden Murphy. Contrary to perception, the survey found that the majority of recent buyers appear to be in it for the long run. Two thirds of those surveyed intend to hold their investment for 11+ years with almost a quarter working to a possible exit in the next six to ten years. Only 16pc envisaged flipping their purchase in the next five years. Nine out of ten said they intend to acquire further hotels in Ireland in the next three years.