Small deals drove Irish hotel investment in 2017

The Gibson Hotel, which is on sale for over €87 million, is expected to attract considerable interest in investment.
The Gibson Hotel was sold for for €87 million, one of the country's biggest deals for 2017. Photo credit: Gibson Hotel.

During the final quarter of 2017, more than €171 million worth of hotels changed hands in Ireland, outpacing the previous three quarters.

Three large hotel deals in Q3 brought the total hotel investment turnover for 2017 to almost €260 million, according to a report from Cushman & Wakefield, and while these numbers are solid, the total value of deals and the volume of sales were lower than those from 2016. That year set a record with €720 million changing hands for 50 deals, compared with 30 in 2017. The decline could be attributed to a slowing in the sale of distressed assets by the banks, the report said.

Notable deals included the sale of the Gibson Hotel in Dublin’s north docklands to German-based investment group, DekaBank, for €87 million; the €57 million sale of Carton House Hotel and Golf Resort in Maynooth, County Kildare to Irish-American businessman John Mullen; and the sale of the Knightsbrook Hotel and Golf Resort in Trim, County Meath, acquired by Irish-based Blackbee Investments for €17.55 million.

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Many of the deals involved single assets selling for smaller amounts. A full 63 percent of transactions ranged between €1–€10 million, while 23 percent were below €1 million. A third of the deals were conducted off-market.

Development

Ireland also has a strong hotel pipeline that grew 20.6 percent in the number of guestrooms under construction at the end of December. Thirteen new hotels are under construction across the country. 

The research predicted a further rise on hotel retrades this year, which could be driven in part by the reduction in the holding period for capital gains tax to four years from the current seven for assets purchased up to the end of 2014. The positive economic figures are also expected to boost tourism.

“The tourism sector in Ireland continues to remain very positive and we are beginning to see the first new tranche of bedrooms being delivered to the Dublin market,” Isobel Horan, associate director, trading assets at Cushman & Wakefield, said. “These bedrooms are critically important to the city for it to remain competitive as a tourist destination. They will easily be absorbed into the market without any impact on existing KPIs and profitability.”