Kennedy Wilson has called the bottom of the market here for retail property. According to spokesman Peter Collins, who runs the European office in Dublin, advised the company would be focusing much more on retail this year.
To date, the firm have bought 21 properties in Dublin, most of which comprise of office and apartment blocks, along with commercial assets such as the landmark Shelbourne Hotel in St. Stephens Green.
Last year, Kennedy Wilson entered the Irish retail property sector by acquiring control of Stillorgan shopping centre, via the Opera portfolio of Treasury Holdings property loans, which was purchased from NAMA and amounted to €306 million.
Collins remarked that, although the retail sector is a tough place to be: “the leading indicators look good”, advising that the firm would focus trying to acquire shopping centres, anchored by grocery tenants.
Kennedy Wilson currently has $13.7 billion of assets under management globally.
Speaking at a property seminar in the Marker Hotel, Dublin, which was organised by the Society of Chartered Surveyors Ireland, also revealed that the firm are planning to invest further in apartment blocks, for the rental market.
Kennedy Wilson currently owns about 800 apartments in the city, including blocks on Clancy Quay, but Collins said it was aiming to get “into the thousands” in the coming year.
The firm is likely to increase the Clancy Quay apartment investment. Planning permission has already been granted for more than 200 additional units, on top of the 400 currently owned by Kennedy Wilson.
Collins advised that the company would concentrate on acquiring more “broken” schemes, aiming to gain control of the management companies for the apartments, also.
He also revealed that the key to making money in the residential rental market is to drive net operating income. Costs to landlords are rising, thanks to extra property taxes, and as a result, Kennedy Wilson would be expected to increase rents for tenants, in order to boost its net operating income.
Even in spite of this synopsis, Collins advised there is no scope for “spectacular” rental growth, at the moment, and that rents are not yet high enough to justify investors spending significant sums of money on apartment blocks in Greenfield sites.
He also warned against policymakers attempting to introduce rent controls, which he feels is not a good idea “when rents are not high enough to justify new development”.
Outside of the residential market, Kennedy Wilson is also trying to acquire more office blocks in Dublin. Currently, it owns around 232,260sq m (2.5 million sq ft) of property overall, with Collins noting that around 95% of which is occupied at the minute.
Collins noted a shortage of old office blocks suited for refurbishment, remarking that the “media and government” are focused on the impending shortage of large-scale office buildings in Dublin.
However, he noted that the busiest end of the market is actually that related to tenants looking for space of 929sq.m. (10,000 sq.ft.) or less, which will come as a surprise to investors and buyers alike.