Friday 20 April 2018

Leeside Apartments scheme at €10m offers potential 9.3pc yield

Leeside Apartments could be used for student accommodation. 23,800 students attend Cork’s third level institutions.
Leeside Apartments could be used for student accommodation. 23,800 students attend Cork’s third level institutions.
UCC in Cork
Ronald Quinlan

Ronald Quinlan

A scheme of 78 apartments located in the heart of Cork city centre, and with the immediate capacity to deliver income of €970,000 per annum, has been brought to market with a guide price in excess of €10m.

Given the potential for a 9.3pc yield (following standard purchaser's costs) of the Leeside Apartments complex, joint agents CBRE and Cushman & Wakefield expect significant interest from investment funds, multi-family operators, private investors and student accommodation operators from both Ireland and abroad.

The scheme, which is a mix of student and private rented residential accommodation, comprises 78 apartments in five adjoining blocks, providing a total of 149 bedrooms in a mix of one, two, three and four-bedroom units.

Currently, 35 units are let privately, while the remaining 43 units are in use as student accommodation. The complex provides 175 bed spaces and 32 private car parking spaces.

While the Leeside Apartments are projected to generate around €800,000 for the year 2016 to 2017, including summer rental income, the agents see potential for a significant increase in income to in excess of €970,000 per annum in the short term, following the letting of units held vacant for marketing purposes, lease renewals and the re-letting of units as they become vacant.

This level of income could, the agents maintain, be driven higher through a full refurbishment programme.

Located on Bachelors Quay, overlooking the River Lee in Cork city centre, the development is situated immediately adjacent to the Mercy Hospital, the Tyndall Institute and the University College Cork Distillery Complex. It is also positioned just a short distance from UCC's main campus, Patrick Street and the South Mall.

The potential for Leeside Apartments to be used as student accommodation is obvious given its proximity to UCC and the Cork Institute of Technology (CIT). There are currently in excess of 23,800 students enrolled in third level institutions in Cork city.

The demand for private residential accommodation in Cork is strong, too, with the city recording the highest rate of rental inflation in the country in the past 12 months.

Cork city and its surrounding area is already home to major names such as Apple, Intel, Johnson Controls, EMC, Pfizer and Eli Lily, all of which attract a skilled workforce to the area.

The city's economic outlook is positive following a number of recent job announcements, including Apple's expansion of its Hollyhill complex, and Johnson Controls' expansion of its global headquarters at One Albert Quay. This ongoing growth in Foreign Direct Investment is expected to strengthen the demand for private residential rental accommodation even further.

Managing Director of Cushman & Wakefield's Cork investment department, Peter O'Flynn, said: "With the current pressure on rents in both the multi-family and student accommodation sectors, we are certainly going to see substantial income growth from this asset in the coming years.

"Its location and the lack of similar investment opportunities in Cork will ensure a wide range of purchaser types."

CBRE Advisory & Transaction Services senior director Willie Norse added: "The economics for this asset class are working really well at present and Leeside Apartments is an excellent opportunity for any investor seeking to diversify their portfolio with a multi-family or student accommodation asset."

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