Blarney Bucks - The Irish have found their pot of gold in U.S. real estate.
Christopher Steiner 06.04.07
The Irish have found their pot of gold in U.S. real estate.
The second city recently got a boost when its finicky city council approved plans for the Chicago Spire. The 2,000-foot twisting monster it looks more like a giant drill bit than a 150-story apartment dwelling will be the tallest building in the U.S. when completed in 2010 (and worldwide second only to the 2,651-foot Burj Dubai, due in 2009). As remarkable: The Spire is backed by Irish money. Shelbourne Development of Dublin controlled by billionaire Garrett Kelleher, who got his start renovating ratty apartment buildings in Chicago in the 1980s is expected to put up $450 million of the $1.5 billion project; the rest will probably come from a bank.
Once the economic slag pond of the EU, Ireland has crept up the wealth ladder. It now has the fifth-highest per capita income in the world, $58,200, ahead of Switzerland and the U.S. Next year, predicts the International Monetary Fund, it will take fourth place.
Enriched on high technology, low taxes and foreign investment, the Irish bid up their own country's real estate in the last ten years. The average home in Dublin goes for $580,000, triple what it did (inflation-adjusted) in 1997. Now these real estate owners are starved for more. Affluent Irish keep 50% or more of their assets in property, says James Carroll, chief of Investor First, a Dublin real estate and development firm. "Historically, we were ruled by the British, so we didn't own our land. When we finally got it, we kept it--and wanted more," he explains.
American properties are a natural fit for the Irish, says Niamh Lynch, director of Boston College's Irish Institute. "Even compared with the rest of the EU, the U.S., to most Irish, is the preferred place to put their money."
By 2006 Ireland had $22 billion invested in the U.S., up from $3 billion in 1994. The pace has quickened, says Carroll, whose firm estimates the Irish will spend $10 billion on American dirt, steel and concrete this year. Says Sean Conlon, an Irish expat who founded Chicago real estate company Sussex & Reilly and who is developing a 300-room hotel in the city's West Loop: "I now have three Irish groups vying for that project."
Is it smart to invest in U.S. real estate, just as it's heading south? "This isn't like the Japanese money," says Conlon. But the market is sure starting to look like New York's in 1989.
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