Investors, forget apartments and buy a hotel room instead

Grand Canal Hotel in D4 has two rooms plus parking package on offer for €325,000

Rooms for sale at the Grand Canal Hotel. Photograph: Cyril Byrne

Rooms for sale at the Grand Canal Hotel. Photograph: Cyril Byrne

 

Investors looking for a steady income plus potential capital appreciation can now consider investing in a hotel room in Dublin’s 169-bedroom Grand Canal Hotel.

The four-star McEniff-operated hotel is offering two hotel rooms, the adjacent 530 and 531, along with three car spaces, 23, 24 and 25, through Ray Cooke auctioneers for €325,000. With quarterly rent of €8,425.50 on offer, investors can expect to generate income of €33,702 a year on their investment, for a yield of about 10 per cent. No annual management charge applies to the investment, and auctioneer Conor Clarke says rent is guaranteed, as per the current contract with McEniff, which took a 35-year lease on the hotel from 2003. The contracts are subject to upward-only rent reviews, and it will be up to the new owners of the hotel rooms to negotiate any increases going forward with the hotel operators.

Ray Cooke is not the only auctioneer selling rooms at the hotel; Casey & Kingston has five two-bed suites on the market, for €1.25 million. Promising an annual income of €78,986, this investment has a yield of about 6 per cent, with a rent review in 2021.

It’s not the first time the hotel has looked to sell rooms; a one bed en suite came on the market last year, looking for €99,000, based on gross rent of €6,800 with an upward-only rent review, yielding about 7 per cent. Earlier this year another room, 206, came on the market at €110,000, generating gross rent of €8,900 a year, yielding about 8 per cent, while Mr Clarke said he has just gone sale agreed on a further unit.

According to Mr Clarke, there is “huge demand” for the units, with cash-hungry investors looking for a decent yield and an alternative to deposits, and none of the hassle that can be associated with residential properties.

Typically, purchasers of some units will be cash buyers, with banks potentially loathe to lend on hotel investments.

The revival of the hotel investment market is a recent enough development; back in the boom years investors snapped up rooms in the then Four Seasons in Ballsbridge and the Clarion in Liffey Valley.

Now individual investors and receivers are availing of greater demand to offload such investments.