Just who is buying up Dublin?
Foreign buyers scramble to snap up prime assets in the capital
Kennedy Wilson - AmericaLed by Bill McMorrow, Kennedy Wilson is leading the investors’ buying spree of Dublin commercial property. Its €306 million deal this week for the Opera/Castle Market Holdings portfolio includes the Bank of Ireland building on Mespil Road in Dublin 4. It also owns a stake in the bank itself. Other purchases include the State Street building in the docklands for €108 million, the Gasworks apartment complex in D4 for €84 million, and the Clancy Quay development near Phoenix Park for €40 million.
London & Regional - Britain Run by the notoriously secretive brothers, Ian and Richard Livingstone, who both live in mansions near London’s Regents Park. It paid €20 million for the Eircom building in Citywest, as well as €15 million for th eFour Seasons hotel in Ballsbridge, D4 (above).
Igal Ahouvi - Israel An avid art collector, the billionaire Ahouvi has also been collecting small-scale Irish retail assets shunned by bigger investors. He has spent baout 100 million so far in Ireland, with assets including Aldi stores in Sandyford and Parnell Street (above), as well as a shoe shop on Henry Street.
King Street Capital - America The $20 billion hedge fund was founded by Brian Higgins and Francis Biondi Jr. Earlier this year, it bought Bishop’s Square (above), the Irish home of Rupert Murdoch’s News International for €65 million.
Northwood Investors - America Founded by John Kukral, Blackstone’s former property chief, Northwood bought Bord Gais’ headquarters at One Warrington Place for €27 million (above). It was an underbidder for several large sales, including the Opera portfolio.
Blackstone - America One of the world’s largest investment firms, headewd up by Stephen Schwarzman. It paid €67 million for the Burlington hotel on Leeson Street (above). It is planning more property acquisitions here, to add to investments in other sectors, such as its near 20 per cent stake in Eircom.
Dublin, according to Russell Jewell of AEW private equity, is at the centre of a commercial property “feeding frenzy” of international buyers.
Among those taking a bite this week were Kennedy Wilson, which closed a tasty €306 million deal for a Treasury Holdings portfolio, and CapREIT, a Canadian fund that paid €40 million for four city apartment blocks.
With analysts predicting that commercial property deals will top €1.2 billion in 2013, the capital is in the midst of an Indian summer of activity, after the nuclear winter of the crash.
A veritable United Nations of investors has descended upon Dublin over the last 18 months, from America, Britain, Germany, Israel, Canada and beyond.
Who and what is driving this frenzied bidding for Dublin commercial property? And after everything that has happened since 2008, are these people mad?
Not so, say consultants. Figures from property agencies show that sales volumes are on the increase, prices are starting to creep upwards, yields are beginning to shrink, and supply is getting tighter.
Jones Lang la Salle (JLLS) counted 47 transactions in the first half of the year with a value of €613 million, about 95 per cent in Dublin. CBRE counted €603 million in 34 deals of over €1 million. The total for all of 2012 was about €560 million.
“Investor demand remains focused on large-scale prime office and residential buildings in core Dublin locations. We expect to see an uplift in values, with the first signs of increases for large Dublin 2 office blocks,” said Hannah Dwyer, head of research at JLLS. “We have also started to see a tightening of yields for prime offices and prime retail assets.”
Portfolios of assets
Dwyer said JLLS is aware of “about €6 billion of capital” available to spend on the Irish market, mainly in Dublin. About 75 per cent of this, she said, is from abroad. “Opportunistic, private equity purchasers have now been joined by institutional capital, which deepens the range of interest.”
CBRE, which helped advise CapREIT on its apartment blocks this week, said big institutional buyers have been held back by a shortage of large portfolios of assets.
Apart from Kennedy Wilson’s Opera portfolio and the Project Aspen loans bought by an American consortium, few large-scale property collections have hit the Irish market, with Nama controlling supply.
“There are big foreign institutions around, but the challenge is to get their hands on portfolios. They don’t want to have to assemble them over time,” said CBRE’s Marie Hunt.
“The question for Nama is does it sell big portfolios of loans or just sell off the assets? There is such a weight of capital, it just wants the best price. For Nama, it is often better to sell assets individually.”