Cork City Residential Investment Opportunity
Student and Multi-Family Asset
Dublin, 28 September 2016 – Joint agents CBRE and Cushman & Wakefield have today launched Leeside Apartments in Cork City to the market. The scheme, which is a mix of student accommodation and private rented residential is located in the centre of Cork City, a stones throw from the central business district and many significant commercial occupiers. The scheme comprises 78 apartments in five adjoining blocks, providing a total of 149 bedrooms in a mix ofone, two, three and four bedroom units. 35 units are currently let privately while the remaining 43 units are in use as student accommodation. The overall scheme currently provides 175 bedspaces. The complex also includes 32 private car spaces.
Cork City currently has the highest rate of rental inflation country-wide, with strong rent increases over the past 12 months. This highlights the strong potential for rental growth at Leeside Apartments, particularly given increasing demand for rental accommodation coupled with anongoing reduction in available stock. The lack of multi-family opportunities in the Cork market makes Leeside Apartments an obvious target for professional multi-family operators.
Leeside Apartments is projected to generate in the region of €800,000 for 2016/2017 including summer rental income. There is potential for a significant increase in income in excess of €970,000 per annum in the short term, following the letting of units held vacant for marketing purposes, lease renewals and the re-letting of units as they become vacant. This level of income can be driven even higher again through a full refurbishment programme.
Leeside Apartments is centrally located on Bachelors Quay overlooking the River Lee in Cork Citycentre. It is situated immediately adjacent to the Mercy Hospital, the Tyndall Institute and the University College Cork Distillery Complex and it is also a short distance from the UCC main campus, Patrick Street and the South Mall. There are also a host of landmarks and amenities in the area along with restaurants, cafes and cultural attractions such as the English Market and St Anne’s Church in Shandon.
Cork City and the surrounding area are home to a number of globally recognised names such as Apple, Intel, Tyco, EMC, Pfizer and Eli Lily. These large multi-national employers attract a skilled workforce to the area. The economic outlook for Cork is also quite strong at present following anumber of significant job creation announcements, most notably Apple’s expansion of its Hollyhill complex, north west of the city centre and Tyco’s expanding global headquarters at One Albert Quay. This ongoing FDI expansion is strengthening the demand for private residential rental accommodation.
The potential for use of Leeside Apartments as student accommodation is attractive given theproximity to University College Cork and given the calibre of third level institutions located in Cork including UCC and CIT. Students enrolled in third level institutions in Cork City exceed 23,800. This number is growing year on year and student accommodation is quite topical on the back of the growth in student numbers. There has been plenty of activity in this sector in Cork over the past 18 months, however, as there is a lack of completed stock most of the activity has been in the acquisition of sites, with one selling recently on the Western Road to Ziggurat for over €3m, who have made a planning application for 205 bed spaces and a second site at Victoria Cross, the former Crows Nest, reportedly going to University College Cork for in the region of €2.5m.With the pressure of increased student numbers to continue, student accommodation is going to be one of the most active markets in the coming years.
The economics for this asset class are working really well at present and Leeside Apartments is an excellent opportunity for any investor seeking to diversify their portfolio with a multi-family or student accommodation asset.
Peter O’Flynn, Managing Director, Investment Department, Cushman & Wakefield, Cork, Ireland commented: “With the current pressure on rents in both the multi-family and student accommodation sectorswe are certain to see substantial income growth from this asset in the coming years. Its location and the lack of similar investment opportunities in Cork will ensure a wide range of purchasertypes will have an interest in Leeside Apartments”.
Joint agents Cushman & Wakefield and CBRE are guiding excess €10 million for Leeside Apartments, which equates to an initial yield of 7.63% based on the current gross income and ayield on reversion of 9.33% when the projected gross income is secured. These returns can be improved even further should a full refurbishment be undertaken. They anticipate a strong level ofinterest from funds, multi-family operators, private investors, student accommodation operators both locally based and also international purchasers.
The property is being offered for sale by private treaty.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CBRE is the country’s largest commercial real estate services company, now employing over 165 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, debt advisory, project management, consultancy, business rates and compulsory purchase, valuations and research. Please visit our website at www.cbre.ie or www.cbre.ie/ni.