Investments: The recent increase in interest rates and the threat of further rises later this year is having no effect on the property investment market in Dublin city centre.
Several off-market sales of retail properties in the south inner city in recent weeks have set new records for secondary streets with buyers settling for yields of no more than 2 per cent.
The Lisney agency has now gone one better by selling a freehold office investment in Molesworth Street at a yield of just over 2 per cent.
Lisle House, a 30-year-old office block with a period façade, is believed to have been sold to financier Derek Quinlan of Quinlan Private who owns an adjoining property. The sale price of over €27 million is a long way ahead of the guide price of €19.5 million.
With the lease on the building running out in 2008, the move, according to Ann Hargaden of Lisney, is seen as more a property play than a dry office investment sale. And the fact that the block has such a prime location, right in the heart of Dublin's administrative core between Leinster House and Dawson Street, makes it all the more interesting.
Lisle House was extended in the 1970s to provide open-plan floors with good natural light. The block was upgraded in the mid-1990s and fitted with raised access floors, air conditioning, suspended floors and Cat 5 cabling.
The new owners will undoubtedly look for planning permission to redevelop and enlarge the block once more - this permission should be available long before the tenants move and the rental income dries up.
There is clearly scope to provide additional space at the rear of the building which opens on to Schoolhouse Lane.
Architects HKR has already done just this a few doors away on the same lane.
Lisle House is currently producing a rental income of €654,000. The building is let under a 33-year full repairing and insuring lease to Hibernian Insurance Company that expires at the end of 2008.
The entire space has been sub-let to J&E Davy under a short-term lease that also expires at the same time.
Fergus O'Farrell of HOK acted for Mr Quinlan.
