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Hotel properties are forecast to reach €600m in sales this year


More rooms: Butlers guesthouse, Ballsbridge is being quoted at €4m

More rooms: Butlers guesthouse, Ballsbridge is being quoted at €4m

Barry’s Hotel, Great Denmark Street, Dublin 1 has a guide price of €8m

Barry’s Hotel, Great Denmark Street, Dublin 1 has a guide price of €8m


More rooms: Butlers guesthouse, Ballsbridge is being quoted at €4m

A good pipeline of hotel properties is expected to be formally offered for sale in the Irish market during 2020, including some Dublin hotel properties.

This is the view of a number of agents including CBRE who expect the volume of deals to mirror those of 2019.

Their competitors Cushman & Wakefield estimate as many as 20 hotels sold for a total of €583m in 2019, a significant increase on the €98m turnover achieved in 2018, and the second strongest year on record.

Meanwhile Tom Barrett of Savills, reckons the figure last year was an even higher €700m and more than 20 deals this year could generate about €600m in sales. Between 2014 and the end of 2020, he reckons the combined value of Irish hotels will have more than doubled from €4.5bn to €11.6bn.

John Hughes of CBRE believes one of the factors which has increased the value of hotel stock is the increase in the prices paid in recent deals, and the increase in sales price per hotel bedroom has been boosted by the strength of demand from international investors as evident from the depth of appetite and volume of capital looking to acquire Dublin hotels during 2019.

Barrett estimates that between 2014 and the end of 2020 as many as 8,000 extra hotel bedrooms will have been added to capacity, boosting the total stock of hotel bedrooms to 66,000.

As many as 1,900 will be added this year including a Holiday Inn Dublin Airport with 421 rooms developed by JMK Group, who are also opening the Hampton by Hilton with 249 rooms. Saco Locke will open more than 400 rooms in two aparthotels in Dublin 1.

In 2021 a further 2,750 are expected with Staycity opening almost 1,000 bedrooms in its aparthotels and Travelodge adding almost 400.

Among the Dublin hotels CBRE is bringing to the market this year are the Morrison on Ormonde Quay and Butlers Townhouse, Ballsbridge.

The Morrison, with 145 guest rooms and suites, seven meeting and events facilities, is expected to sell for around €80m-€85m. Vendor Inteco Beteilgung is controlled by Russia's richest woman, Yelena Baturina, who is reported to have bought the four-star property from Nama for €22m in 2012 and spent another €10m. CBRE declined to comment.

Meanwhile John Hughes of CBRE is quoting €4m for Butlers, a 20-bedroom guesthouse created from three-storey Victorian buildings at the corner of Lansdowne and Shelbourne Roads and close to Aviva Stadium and the RDS. It has planning permission to extend its dining room and open it as a restaurant to the public.

Meanwhile Daniel O'Connor of JLL is guiding more than €8m for Barry's Hotel, one of the oldest in the city and in an area which is beginning to benefit from urban renewal activity.

This four-storey, over-basement property accommodates 33 bedrooms and benefits from 22m of street frontage to Great Denmark Street, as well as a large ground floor bar and ballroom on a 0.27 acre city centre site.

Mr Hughes said: "There were several unsuccessful under bidders on hotels sold last year who may bid again if suitable assets are brought to the market during 2020.

"Market conditions and the strength of appetite for the hotels traded in 2019 has focused minds and should lead to some hoteliers making the decision to offer hotels to the market over the next 12 months."

He also expects the vast majority of this year's deals to comprise single asset sales as opposed to portfolio sales and a number of these will be re-trades of properties purchased in recent years.

Already the market has seen investors sell some hotel investments they bought at the bottom of the market.

Examples include Tetrarch and Kennedy Wilson. The latter sold The Portmarnock Hotel & Golf Resort in north County Dublin for around €50m. Midwest Holding AG, and an investor group led by Brehon Capital Partners sold The Marker Hotel in Dublin Docklands for €134m.

While some investors may cash in their chips others will buy. Mr Hughes said "demand for prime Dublin assets will be institutional in the main".

Last year these institutional buyers included Deka Immobilien, a German real estate investment group, which bought The Marker and French investor Convivio which bought The Hilton Kilmainham for €45.5m.

"Private investors and hotel groups will be more in evidence in provincial markets," Mr Hughes added. "We expect to see the structure of hotel transactions continuing to evolve, with assets increasingly likely to trade by way of forward sales or investment sales."

He also expects more company sales as a result of increased stamp duty which increased acquisition costs for asset transactions to levels which are higher than the UK and many parts of Europe.

Indo Business