Apartment block makes €2m over guide

JACK FAGAN Commercial Property Editor A private investor has outbid eight others to buy a multi-family apartment block on the corner of Blackhall Place and Blackhall Street in Dublin’s north inner-city for over €6 million – €2 million above the guide price.

The sale of the 25 apartments and two retail units in Oxmantown Green, beside the headquarters of the Law Society of Ireland, will give the new owner an initial return of 5 per cent and the immediate prospects of a higher yield-most likely in the mid 6 per cent – due to rent increases currently under way.

Dessie Kilkenny of Savills, who handled the sale, said the average selling price of €220,000 per apartment was a long way below the replacement costs for these units.

He expected rents for one-bedroom apartments to rise to €1,050 per month; two- bed units to range around €1,300/€1,400 and three-bedroom homes to rise to €1,800.

Oxmantown Green was built by the Galway-based construction company, O'Mahony Finnerty, and was sold on the instructions of Kieran Wallace of KPMG.

Last summer another city apartment scheme developed by two directors of O'Mahony Finnerty, William Beckett House on Pembroke Row, was sold to an Israeli investor at a gross yield of 6.83 per cent. The €6.1 selling price reflected an average valuation of €255,000 for the 24 one and two-bedroom apartments.

Oxmantown Green is currently producing rents of €385,500 from the 25 apartments and two retail units extending to over 410sq m (4,423sq ft) which are let to MJR Cycles Ltd and McDermot Creed & Martyn Solicitors.

The apartments are located in two blocks around a central open air courtyard at first floor level.

The largest of them is a three-bedroom penthouse; there are 10 two-bedroom duplex units; nine two-bedroom apartments and five one-bedroom apartments. There is secure basement parking for 21 cars. .

Investor interest in multi-family apartment blocks has never been higher in the city centre because of the soaring rents and the large number of workers opting to rent at a time when mortgages can be difficult to secure.

American investor Kennedy Wilson has been by far the largest purchaser, buying up some of the most prestigious schemes when Nama and the banks first moved to offload these distressed assets.

Competition has intensified since then, some of it coming from Irish Residential Properties REIT plc which has just bought 84 apartments with 100 basement car-parking spaces and six ground floor commercial units alongside the Marker Hotel for €50.1 million.

The company was advised by CBRE.