#35 million worth of UK properties to be auctioned

UK Investments  A mix of 58 properties to be auctioned in London this month is likely to attract a lot of Irish interest.

Irish interest in the UK property market remains strong, according to London-based property sources, with activity in properties sold by auction as well as private treaty properties.

Large scale institutional investors continue to focus on central London and other urban centres while smaller players are very active in high street properties, particularly in the south-west.

"August was quiet, as always, but things have picked up with the same gusto as before the summer," said Mr John Casey of Lisney's associate office in London. "Certainly it is quite a strong market. It seems it is likely to be another record year, surpassing last year's record market."

Irish investment in the UK market reached about £1.5 billion during 2002, according to most commentators. Reasons most often given include the wide differential between UK stamp duty at 4 per cent and Irish duty at 9 per cent, a lack of high value investment properties in Dublin and the ready availability of commercial, industrial and residential options right across the UK.

You are only an hour away from Dublin, said Mr Darach O'Neill, making it easy for Irish investors to inspect or service properties in the UK. An investment specialist with Nelson Bakewell Property Consultants, he said Irish interest remains as strong as ever, with Irish investors ranked second only to Germany in terms of total funds invested.

His company is planning a property auction later this month featuring a wide range of properties in 58 lots with guide prices totalling £35 million.

These transactions are under instructions from Morley Fund Management, Aberdeen Property Investors, Henderson Global Investors, Croydon Council and Surrey County Council amongst others.

The auction in London on October 13th at the Langham Hilton Hotel ballroom, includes commercial, industrial and residential properties, with guide prices ranging from several million down to £80,000 for individual apartments.

"Nelson Bakewell is trying to be as cross-sectional as possible," said Mr O'Neill. "What we are trying to do is get our Irish desk up and running."

The company handles about £1,000 million a year and employs more than 40 staff. Mr O'Neill is from Dublin and wants to develop the company's Irish customer base. "The auction scene is only starting again but there are still plenty of private deals available," he said.

The under-performance of equities pushed a lot of money into the property sector, particularly from institutional investors. These investors are now drifting back towards improved stock markets, however, taking some of the pressure off availability of the larger lots, according to Nelson Bakewell.

Irish investors are particularly drawn by the UK's preferential stamp duty regime, lower transaction costs and the simplicity of the Irish and UK property markets, according to the company.

The range on offer at the auction is startling, with residential lots guided at just £80,000. Three units on offer in Brighton return a combined £15,000 in rents with an assumed net yield of 6.25 per cent.

Then there is a freehold warehouse investment just outside Manchester which attracts no stamp duty at all, given it is in a disadvantaged relief area. With a current rent reserve of £68,500 and a guide of £750,000, the net yield stands at about 9 per cent.

"From an Irish point of view the best investments are with a sitting tenant," according to Mr O'Neill. He cites as an example a retail lot available in Grimsby, north-east Lincolnshire, let to Argos Ltd for a term of 99 years from 1969. It is guided at between £2.15 and £2.3 million, so with a current rent of £130,000, the assumed net yield is 6 per cent on the lower guide figure.

Another is in Southend-on-Sea in Essex. It is let until 2014 to the Clinton Cards chain and is guided at a starting £1.75 million with a current rent of £120,000, giving a yet yield of about 6.9 per cent.

There is a near freehold office investment let to the Children and Family Court Advisory and Support Service for 25 years from 1990 available in Bristol. It has a guide of from £575,000 to £600,000 and a net yield of between 6.6 per cent and 6.9 per cent.

One further property available at the October 13th auction is in Dorchester and includes two retail units at ground and first floor level and two self-contained maisonettes at first and second- floor level.

The whole property is let to Adams Childrenswear Ltd for 20 years from 1996 and attracts a current rent of £123,820. With a guide of at least £1.8 million, the net yield would be around 6.9 per cent.

The company has a another similar auction planned for December.