IRISH PROPERTY investment group Quinlan Private is reacting to the western European property downturn by heading eastwards in search of higher yields.
Quinlan, which manages assets of €11.5 billion, expects to focus up to 70 per cent of its activity on central and eastern Europe, up from less than 20 per cent three years ago, according to Peter Donnelly, a partner.
The group, which was founded by Derek Quinlan, is also diversifying its financing by raising an expected €400 million with its first US fund, 70 per cent of which it expects to spend on the region.
Quinlan has focused on Britain and Ireland, which represent about three-quarters of its assets but has been selling some of this portfolio as the market has turned.
It has redirected its attention to central and eastern Europe, which has been so far little affected by the downturn. It is active in Poland, the Czech Republic, Slovakia, Hungary and Bulgaria and plans to go farther south and east into Croatia, Romania, possibly Serbia (depending on the outcome of next month's elections), Lithuania, Ukraine and Russia.
Central and eastern Europe represent less than 15 per cent of current assets, but much of this investment has gone into buying land that will rise in value significantly once it is built on by Quinlan Private Golub, the group's joint venture with Golub & Co of the US.
Quinlan Private Golub has developments worth more than €2 billion under way, the largest being the €1.5 billion South City suburb in Bratislava, Slovakia.
Quinlan also plans to open 50 to 60 of its Jurys Inns hotels in the region, where there is a "huge gap" in the three-star category, according to Mr Donnelly.
Yields in central Europe have converged towards western European levels: last year Quinlan sold an office in Prague and a shopping centre in Poland for yields under 6 per cent. Nevertheless, it sees potential in the region because of faster economic growth and rising wealth. To fund these projects, Quinlan will tap US investors as its old Irish equity base dries up. - (Financial Times service)
