Eugene Larkin, the developer behind the Tyrrelstown Town Centre in west Dublin, has become the latest investor to jump at London's knockdown property prices with the snap purchase of Anglo Irish Bank's UK headquarters for £47 million (€62.7 million).
The seven-storey building at 8-10 Jewry Street, located near the Bank of England in the capital's financial district, was one of a number of properties put on the market late last year by Standard Life as part of a liquidity drive aimed at meeting the insurance company's large-scale redemption claims.
Despite strong competition for the office block from other Irish investors, Standard Life failed to achieve its asking price of £50 million (€66.68 million), underscoring the profound gloom that has gripped the sector and sent capital values into freefall.
Last week industry index IPD confirmed the negative sentiment by publishing final quarter figures for 2007 which showed the UK commercial property market suffered its worst performance in history as total returns - made up of the combination of rental income and capital growth - slumped 7.6 per cent.
That's the fastest decline ever recorded in a quarter.
In spite of this, many seasoned industry players believe the pessimism is overdone and London's discounted prices have been attracting a growing band of "vulture" buyers, keen to profit from some of the institutional "fire-sales".
The bargain hunting began in earnest last November when the demand for redemptions from disillusioned small investors forced many retail property funds to sell assets into a falling market.
Although a considerable amount of institutional stock is still available, agents claim the supply flow has been choked back over the past month following a decision by the larger funds to temporarily ban cash withdrawals.
Friends First, Scottish Widows and a French insurance giant have all frozen redemption claims in the short-term in a bid to avert a full-scale liquidity crisis.
A spokesman for Standard Life recently said the insurance firm was still funding its withdrawals but cautioned the "situation could deteriorate if the correction takes longer".
It's understood the institution agreed to sell the Anglo Irish Bank building to Larkin, who already controls a significant London property portfolio, last Christmas at a yield of 5.7 per cent.
Sources close to the deal claim terms were hammered out over a rapid timeframe.
The extensively refurbished 5,462sq m (58,791sq ft) building produces an annual rent roll of £2.7 million (€3.6 million) and houses a Brown's restaurant - a bar and brasserie chain controlled by the embattled pub group Mitchell's & Butlers - on the ground and lower ground floors.
The property's official sales brochure also shows the comparatively high yield is partly generated by a supplementary rental payment from Standard Life. The insurance firm has agreed to "provide a rental top-up" of £456,922 (€609,320) to Anglo Irish Bank's next rent review in November, bringing its annual rate up to £2.4 million (€3.2 million).
By that stage, however, the bank may have relocated to larger accommodation. The firm indicated it was in expansion mode last year by circulating a requirement for 11,148sq m (120,000sq ft) of space to the market.
But it is unclear whether Anglo Irish Bank intends to pursue this plan in the current market conditions.
The global credit squeeze has convinced many companies to delay expansion-led moves, pushing occupier-demand in the UK to its lowest levels in five years.
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