2018 was an exciting year, filled with highs and lows. Brexit was of course the key influencer, with mixed fortunes for our two main investment markets; Dublin benefitted greatly, whilst London suffered from uncertainty.
For Ireland, 2018 was another year of exceptional growth. The nation continued to assert itself as a global investment hotspot, developing a multi-million-pound pipeline for commercial property, as well as poaching a range of technology and financial giants from the UK; 27 to be exact. The Irish economy also hit new heights in 2018, confirming its place as the fastest growing in the EU for the sixth year running.
A major challenge for the UK and Ireland has been resolving the housing crisis. With chronic undersupply creating upward price pressures on homes, it has become a key policy of both nations to unlock more land, develop new construction methods and ultimately, build more homes. The Private Rented Sector (PRS) has become increasingly attractive to developers and investors alike, as the consumer trend shifts from home-ownership to high-end, multi-function accommodation. In Dublin, REITs have become particularly interested in luxury student accommodation which promises strong, long-term, returns.
The prime central London housing market has been one of the hardest hit in 2018, although this has presented an opportunity for South Hill Capital. Our long term investment horizon and equity finance model mean we are well placed to invest in the right opportunities at the right time.
2018 was a quietly efficient year for South Hill Capital with the reshaping of our Dublin portfolio. The year started with the sale of a newly refurbished city centre office block, achieving a record sales price per square foot for a Georgian Building in Dublin. We completed the renovation of a prime Georgian townhouse in Dublin 2, an asset now close to capacity and achieving far above average rental returns. We were also granted planning permission for the renovation of another Georgian building on Merrion Square. We plan to bring eight luxury apartments to market, in an area of desperate need.
Going in to 2019, from an investor’s perspective the UK and Ireland both present ample opportunity. With changing market strengths, we must be selective in our approach. More than ever, it is vital to wait to see where the value will appear and invest wisely in assets that offer value in terms of market pricing and opportunities to improve. In our next blog, we focus on the London market and SHC’s approach to playing the waiting game, finding value in prime assets, and why having capital at the ready gives us an advantage.