Sunday 21 January 2018

International firms looking to buy cheap sites from NAMA portfolio

Donal Buckley

Top-level property firms and private equity funds, including Carlyle Group, Blackstone and British Land, have already expressed interest in buying up cheap Irish property that could come on the market as a consequence of the establishment of the National Asset Management Agency (NAMA), the Irish Independent has learned.

German property funds have also contacted the body which is being created to purge the banks of €90bn of toxic loans.

John Moran, managing director of Jones Lang LaSalle, reports a significant increase in interest from German funds in Irish properties and he expects them to buy at least two or three Irish properties before the end of this year.

"That may not be a lot but it's two or three more properties than overseas funds have bought for a number of years," he added.

The German funds are interested in commercial properties.

The Irish property market has jumped to seventh place in a global survey of distressed assets making it more troubled than 20 other countries assessed. But the level of distress has piqued the interest of international specialist funds which are looking to buy cheap properties.

Consequently, Irish agents report the seventh strongest pick-up in interest from specialist funds inquiring about buying distressed properties, according to the Royal Institute of Chartered Surveyors (RICS).

Duncan Lyster of Lisney says one of the attractions is the legal strength of Irish leases but that is tempered by concerns about the economic outlook and occupation levels.

"Some local investors have also been looking for opportunities but these would not be formal funds," he adds.

To date, most of the distressed properties that have come to the market have been hotels and very few of them have sold. Consequently, receivers and liquidators have been agreeing lease deals or deals with operators to keep the businesses alive and protect the value of the properties.

This prompted concerns from the Irish Hotels Federation that banks and NAMA may effectively be assisting weak businesses whose aggressive pricing would undermine well-managed family hotels.

But the overseas funds are not interested in hotels as they prefer prime office properties and shopping centres which are well let to blue chip, international tenants and very few of these have yet to come to the market. When NAMA is in operation, more of these are expected to come to the market.

According to the RICS survey, of the 27 countries surveyed, 75pc reported a rise in the number of distressed commercial property coming to the market. South Africa, the US, New Zealand, Hungary and the Caribbean reported greater increases than Ireland. China and Brazil showed the strongest markets.

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