Montrose Student Residence beside UCD on sale at €41.5m

The Montrose Student Residence located beside the UCD campus at Stillorgan Road, Dublin 4, is expected to be of interest primarily to international investors when it goes for sale from today at a guide price of over €41.5 million.

The first purpose-built student accommodation of its kind to come on the market in Dublin will show an income yield of around 5.4 per cent after standard acquisition costs, according to Fergus O’Farrell of selling agents Savills. The gross rent roll is forecasted to reach €2.91 million per annum.

The Montrose is based on the former three-star hotel of the same name which has been converted at a reported cost of €22.5 million by a Scottish company, Ziggurat Student Living. It bought the hotel at the depths of the property crash in 2012.

The redeveloped 1960s building now has 205 ensuite bedrooms over five floors, including a two-bedroom penthouse, which are almost fully booked for the upcoming academic year. The 777sq m (8,363sq ft) on the ground floor have been let as complementary neighbourhood services including a Bank of Ireland branch, a Spar convenience store and a thriving Insomnia cafe. The grounds include 52 surface car-parking spaces.

Savills is forecasting that the student accommodation will bring in rental income of around €2.69 million. What Ziggurat describes as “classic” bedrooms are to be let at €245 per week, superior bedrooms at €275 and twin bedrooms at €300. The commercial units will account for a further €220,000 per annum, bringing the overall rent roll to €2.91 million.

Active market

Fergus O'Farrell said he expected that a very active student accommodation market in Dublin would evolve to compete with other commercial investment asset classes across Ireland as more sales come to the market over the next year or two.

Marcus Roberts, head of student investment at Savills, said the chronic undersupply of purpose-built student accommodation, together with strong rental growth prospects and the prime location of the Montrose scheme beside UCD made it a "very attractive investment".

UCD is the largest university in Ireland, with a student population of over 32,000. Savills says there are currently 90,000 purpose-built student bedrooms in Dublin including university-owned units and privately built stock. There are a number of large-scale student blocks currently under construction in the city.

Ziggurat has also bought a number of sites in Dublin's north city centre as part of a €400 million Irish expansion plan after completing the Montrose project. The company has already announced plans to build several of its own developments including a 380-bed facility in Dublin's north inner city; a 420-bed centre adjacent to the DIT Grangegorman campus and a 200-bed facility on Cork's Western Road near UCC.