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Ballast House, Westmoreland Street, Dublin 2
Ballast House, Westmoreland Street, Dublin 2
A recent study by Union Investment and BulwienGesa asked this question: for investors in student accommodation, which cities are most attractive?
The study ranked 65 cities, four international ones (Amsterdam, Dublin, Paris and Vienna) and 61 German ones. The result is fascinating. The 11th most promising city for student accommodation is Darmstadt. The 13th most promising is Koblenz. Between these two lies Dublin, the Irish capital and an increasingly popular choice for German real estate investors.
German investors find Dublin an attractive location across many sectors, not just student accommodation. Since June this year, for example, the local press here has carried news of German investment in other sectors: residential, hotel, retail and office.
1. The first deal comprises 179 apartments being developed by the Marlet Property Group at Mount Argus in Harold’s Cross, Dublin 6W, a popular area where the author of this article happens to live. Patrizia bought this build-to-rent asset for Bayerische Versorgungskammer (BVK).
2. The second deal sees one of the Dublin’s oldest hotels, the Central Hotel on Exchequer Street in the city centre, being acquired by Munich-headquartered Deutsche Finance International (DFI) in a joint venture with a local Irish partner. The 130-year-old hotel was acquired for an undisclosed sum, though the asking price on the hotel was about €40 million. This is a value-added play: the new owners are planning a major refurbishment (which, based on what my last visit there, is long overdue).
3. The third deal involves a mixed use (retail and office) building in the city centre, which Union Investment recently bought for around €27 million. The building is iconic and overlooks Dublin’s main bridge, O’Connell Bridge.
The façade dates from 1866 and was retained when the historic building was demolished and rebuilt in 1981. The property will be added to the open-ended real estate fund UniInstitutional European Real Estate. The engraving below shows Ballast Office as it looked in 1870.
This is the just the recent news. Over the last few years, German institutions have become an increasingly important feature of the Dublin market. Allianz Real Estate has invested in two of Dublin’s largest shopping centres (Dundrum Town Centre and Liffey Valley); Union Investment has invested in the office sector, including an investment in the Liebeskind-designed building which currently houses part of Facebook’s Irish operation.
The list of German players also includes KGAL, Real I.S. and Quadoro Doric.
Senior care is a niche but fast-growing sector in Ireland and German investors are present here too: in December 2017 IMMAC from Hamburg spent about €33m buying Beechfield, operator of three nursing homes around Dublin.
German investors are not alone in finding Dublin attractive. British, Dutch, Korean, Singaporean and Swiss investors are also keen. Ireland’s strong macroeconomic and demographic profile is undoubtedly part of the attraction.
Another point in Ireland’s favour is the transparency of the real estate market, which is very high and estimated by JLL to be among the top ten globally. Yields in Dublin remain higher than in Germany (for example, prime office yields in Dublin are 4.0% compared to 3.1% in Germany’s big seven cities).
Finally, I should add that while most of the investment from Germany is concentrated in Dublin, some other destinations in Ireland are also attracting attention. Cork, reluctant second city, is the main target.
The author is founder/director of S Ryan Invest, Dublin, and a former Research Manager at INREV in Amsterdam and Mercer Investment Consulting.
