A company developing 1,170 apartments in the Dublin suburbs is to seek in excess of €425 million in forward funding for the homes in four separate locations. It will be Ireland's largest single sale of a private rental sector portfolio, according to Domhnaill O'Sullivan of Savills.
The Marlet Property Group, owned by Dublin-based property developer Pat Crean, and M & G Investments, the fund management arm of Prudential Plc, control the four developments at Mount Argus and St Clare's in Harold's Cross, Dublin 6W, along with Carriglea in Bluebell, Dublin 12, and Cabra Road in Dublin 7.
Based on the present rental values for multifamily apartment schemes in the Dublin suburbs, Savills estimates that the equivalent net rental yield from the Dublin Living developments would now be in the region of €20.5 million, taking running costs into consideration.
However, with the four schemes due to be completed on a phased basis between the second half of 2018 and the early part of 2020, the estimated rental figure is forecast to increase significantly during the construction period because of the undersupply of private rented accommodation in Dublin.
The quoting price of more than €425 million will equate to a net income yield at today’s rental values of about 4.6 per cent, rising to at least 5.25 per cent during construction.
Investment groups likely to show interest in the apartment project are the German real estate fund Patrizia, AIG Insurance, Tristan Capital Partners, APG Asset Management, Kennedy Wilson, Ivanhoe Property Investment, and Oxford Capital Partners.
Savills research shows that the number of households renting privately in Dublin has grown by 42,000 since 2012. With housing construction failing to keep up with the increasing rental demand, the vacancy rate has been driven down to just 1.45 per cent.
Business centres
Dublin’s population is also rising by about 1.4 per cent per annum (20,000 people) and, with the supply shortfall, rents are expected to rise by an average of 7.3 per cent per annum, or 14.5 per cent, compounded up to the middle of 2019.
The four high-quality developments will be predominately two-beds (750 in all) along with 255 one-beds and 165 three- beds. All apartments will come with fully-fitted kitchens and bathrooms; residents will be able to avail of lounges, business centres, meeting rooms, gyms and concierge facilities.
The first of the developments, Mount Argus in Harold’s Cross, is already under construction with most of the superstructure in place on the 4.4-acre site. The 180 apartments planned for the site will be located in eight three- to five-storey blocks with basement car parks for 280 cars.
Savills expects a net rental income of €3.3 million at today’s values from the 130 two-beds, 25 one-beds and 25 three-beds, which are due to be completed in the second half of 2018.
St Clare’s is also located in Harold’s Cross on a 4.2-acre site, which served as St Clare’s Convent beginning in 1803. The planned 220 apartments and secure underground parking for 154 cars will be located in seven multistorey apartment blocks in addition to the original convent, chapel and orphanage buildings. The estimated rental value will be in the region of €4 million. The scheduled completion date is 2019.
Carriglea development
The planned Carriglea development, 5km southwest of the city and within three minutes’ walk of the Bluebell Luas stop, is expected to have a rental value of €5.9 million from 362 apartments spread across 10 multistorey blocks. The majority of units (223) on the 6.47-acre site will have two bedrooms. There will also be 64 three-bed apartments and 75 one-beds.
The Cabra scheme will be the largest asset, with 408 apartments expected to produce a rent roll of €7.3 million based on today’s rental values. It is within 1km of the Grangegorman Quarter student campus, which currently accommodates more than 10,000 staff and students and is expected to double in numbers.
The 9.69-acre site will include eight multistorey blocks to accommodate 97 one-beds, 270 two-beds and 41 three-beds. When it is completed early in 2020, the scheme will also include 2,694sq m (29,000sq ft) of retail space, separate offices and a creche, along with 429 car parking spaces.
