A block of 18 apartments in Rathgar purchased for €2.3 million in 2012 has sold for over €6 million.
The complex, Sycamore Court at 75 Rathgar Road, on a third of an acre, was placed on the market by Goodbody Stockbrokers Nominees through agent Hooke & MacDonald guiding €5.5 million in recent months. The buyer is understood to be a UK-based investment fund.
When the property – complete with 22 parking spaces – was purchased from a receiver in 2012, the initial gross yield was 9.35 per cent based on a rent roll of €215,000.
Goodbody Stockbroker Nominees, a wholly owned subsidiary of Goodbody Stockbrokers, according to company filings has benefited from both a strong increase in rents and a contraction in residential investment yields during its period of ownership.
Since purchasing the block, the rent roll has increased by over 42 per cent to €306,408 per annum, which equates to an initial gross yield of 5.09 per cent for the buyer.
The transaction underlines investors’ continued strong appetite for Private Rented Sector (PRS) investments. Based on the internal areas of Sycamore Courts’ apartments: two one-beds, 14 two-beds (each with 48.5sq m/522sq ft) and two two-bed apartments (with 66sq m/710sq ft).
The transaction can be broken down to a capital value of €6,745 per square metre (€627 per square foot). The purchaser most likely paid a premium to benefit from full control of the complex compared to the apartments’ break-up values were they to be sold to individual purchasers. For example, an apartment with parking at the nearby Frankfort Court development sold in June for about €5,720 per square metre (€531 per square foot).
Due to the timing of its purchase, Goodbody’s sale of the Dublin 6 complex is likely to be exempt from capital gains tax (CGT). The Finance Act 2012 introduced a CGT exemption (later amended by the Finance Acts 2013 and 2017) whereby the sale of property purchased between December 7th, 2011, and December 31st, 2014, is fully exempt from CGT when held for a period of for four to seven years.
If exempt from CGT, Goodbody’s €3.725 million profit represents a 162 per cent return on its initial investment.
While the agent’s marketing material indicates that half of the apartments have been refurbished, these costs would likely have been absorbed by the €1 million-plus in rents collected in the last six years based on quoted rent roll.
