17th October (Issue 118)
Welcome to the Origin Capital Weekly Irish Property Review. This update is designed to provide you with a full recap of the latest property news from the media over the last seven days.
BUDGET 2018
Stamp Duty Increase: The property market will be watched closely over the next 12 months, following the increase in commercial property stamp duty in the 2018 Budget from 2% to 6%. While the Government are hoping that the rise will lead to a substantial increase in revenue, industry sources are advising that alternative measures such as share sales may become more popular, replacing outright asset sales. The stamp duty on share sales, where the shares in a company are sold rather than the asset itself, is much lower at 1%. The Sunday Business Post, 15th October
LOAN / PORTFOLIO SALES
Danske Portfolio: A joint bid by Goldman Sachs and Pimco has been chosen as the preferred bidder for Danske Bank’s c. €1.8bn loan portfolio. The Sunday Times reports that they will pay c. 95 cents in the Euro for the portfolio, which largely consists of performing mortgages, however a substantial number of these are on low interest rates. The Sunday Times, 14th October
RETAIL
The Square Tallaght: The Irish Times reports that Blackrock, Orion Capital Managers and a fund belonging to Oaktree are amongst the shortlisted bidders for a majority stake in The Square Tallaght, which is guiding €233m. The majority stake in the centre is being sold by joint agents Cushman & Wakefield and JLL, under the instructions of NAMA. The sale includes 118 of the centre’s 160 retail units, a 13-screen cinema and over 2,400 car spaces. The Irish Times, 17th October
Debenhams Cork: Colliers are understood to be guiding €70m – €75m for 12 – 17 St Patrick’s Street in Cork city centre, a 152,000 sq. ft. retail unit occupied by Debenhams. The unit has been occupied by Debenhams since 2006, and the rent has recently been renegotiated at €3.25m p.a. The unit is situated on a 1.32-acre site in the heart of Cork’s prime retail area, and has development potential, with the sales prospectus stating that there is scope for three large retail units and a 220-bed aparthotel on the site. The property is being sold on behalf of the Roche family. The Irish Examiner, 12th October
The Merrion Collection: Friends First has paid less than the €9m guide price to acquire the Merrion Collection, a portfolio of four commercial buildings on Merrion Row in Dublin city centre. The portfolio includes the Unicorn restaurant and a high profile development site. The current rental income from the properties, which extend to 8,800 sq. ft., is €433k p.a., however this should be improved through either refurbishment and / or redevelopment. Three of the properties have leases expiring in 2018, while the fourth lease expires in 2020. Options for the new owners include refurbishment and amalgamation of the buildings, renegotiating existing leases, or a full-scale redevelopment of the properties. There is lapsed planning permission for a substantial redevelopment including a restaurant / cooking school, a ground floor retail unit and an aparthotel. The Irish Times, 11th October
Dublin 15 Retail Centres: Bannon are guiding €5.85m for two shopping facilities at Rathborne in Ashtown, Dublin 15. The Village and River Centre are two separate retail schemes within the extensive Rathborne housing development, which is located beside Ashtown train station and Phoenix Park. The Village contains an owner-occupied SuperValu and 14 other retail units extending to 20,503 sq. ft., which generate combined rental income of €373k p.a., with tenants including Lloyds Pharmacy and Bombay Pantry. The River Centre, which is considerably smaller, is located c. 400m away and contains a Spar and a Giraffe Childcare facility. A GP is due to rent another unit in the near future, after which the net operating income will rise to €188k. The €5.85m guide price will offer the new owners a return of 9.2%. The Irish Times, 11th October
Greendale Shopping Centre: Turley Property Advisors and Knight Frank have set a guide price of €2.75m for the Greendale Shopping Centre in the north Dublin suburb of Kilbarrack, which is expected to be placed on the market in the coming weeks. The centre extends to 25,000 sq. ft. and consists of offices let to the OPW, and nine retail units. The overall rental income from the centre comes to c. €269k p.a., with the OPW paying €100k p.a. for 10,000 sq. ft. of space. The retail tenants include Centra, Paddy Power and Ryan’s Pharmacy. The weighted average unexpired lease term of the tenancies is c. 8.3 years, and the centre will offer a return of 9.5% after costs have been deducted. The Irish Times, 10th October
Dublin Retail Rents: New analysis from Cushman & Wakefield has shown that rents on Dublin’s prime retail streets have stabilised over the last nine months, as value-driven behaviour by shoppers presents challenges for retailers. The analysis shows that prime rents on Grafton Street have settled at c. €600 psf (38% below the previous peak) while those on Henry Street stand at c. €435 psf (33% below the previous peak). Only moderate rental inflation is predicted in the city’s top retail streets in 2018. The report shows that there are only a limited number of retail units available on Grafton Street and Henry Street, with high occupancy rates limiting retailers’ options. Despite high occupancy, Dublin’s prime trading streets have seen a decline in footfall, with a 1.6% decline being recorded on Grafton Street in the year to August 2017. The Irish Times 10th October
One Ballsbridge: Avoca is set to open a food hall and Dylan McGrath is to open a new restaurant at One Ballsbridge, a new business, leisure and residential centre under construction in Ballsbridge, Dublin 4. Both facilities will be located on the ground floor of the development, which will contain three seven- and eight-storey blocks. Avoca will pay a rent of c. €250k p.a. for an 8,000 sq. ft. food hall, which is due to open in March 2018, while Dylan McGrath will open a 4,500 sq. ft. restaurant in a different building, paying a rent in excess of €50 psf. The Irish Times, 11th October
OFFICE
Former Central Bank Building: Hines and the Peterson Group have been granted planning permission by Dublin City Council for a c. €75m redevelopment of the old Central Bank building on Dame Street in Dublin city centre. The redevelopment will include the provision of a two-storey, 360-degree, 300-seater rooftop restaurant and bar, and the wider development will include food, beverage and retail uses at street and basement level, and host over 1,000 workers in c. 129,000 sq. ft. of offices. In granting the permission, the council imposed strict noise conditions on the rooftop venue, in response to concerns from nearby Temple Bar residents. The Sunday Times, 8th October
10 Molesworth Street: AIB has signed a lease with IPUT for 10 Molesworth Street, a new 115,000 sq. ft. office building under construction in Dublin city centre. The bank will occupy the entire seven-storey building on a 20-year lease at an agreed rent of €57.50 psf, which is slightly below the €62.50 psf being commanded for Prime Grade A office space in the area. The new building will be the first newly-constructed office building in Ireland to achieve platinum accreditation through the LEED sustainability rating system, and is due for completion in Q1 2018. The Irish Independent, 13th October
65 Fitzwilliam Square North: RGRE J&R Fitzwilliam Ltd has sought planning permission from Dublin City Council to construct a 3,000 sq. ft. extension to an office property at 65 Fitzwilliam Square North in Dublin city centre. The extension is to be completed by way of a two-storey extension to the existing building, with additional space being developed to the rear. RGRE was incorporated in 2014 and is controlled by the Ronan family. NAMA Wine Lake, 15th September
Two Haddington Buildings: Selling agents Savills and HWBC are guiding in excess of €23.5m for a newly refurbished office building on Haddington Road in Dublin 4. The property, which has recently been named Two Haddington Buildings, is leased to a Japanese advertising and public relations firm Dentsu Aegis Network, a subsidiary of the Japanese firm Dentsu, on a 10-year lease at an initial rent of €48 psf, equating to more than €1.4m p.a. Based on the rent roll of more than €1.4m p.a. and increased acquisition costs of 8.46%, the investment will show a yield of 5.5%. Based on the sales price, the property offers a capital value of €828 psf. The five-storey building extends to 28,385 sq. ft. and contains 11 surface car-parking spaces accessed from Percy Place. The Irish Times, 11th October
HOTEL
Carton House: The Irish-American businessman John Mullen has acquired the Carton House hotel and golf resort in Co. Kildare for c. €57m, €3m below the €60m guide price. The resort sits on a 668-acre site and includes a 165-bedroom hotel, a new hotel complex and high-end spa and two championship golf courses, designed by Colin Montgomerie and Mark O’Meara. The resort was sold by the Mallaghan and Kelly families, in a consensual sale with NAMA. The Sunday Times, 15th October
Radisson Blu Hotel & Spa Galway: The Radisson Blu Hotel & Spa in Galway has been purchased by a partnership involving Jerry O’Reilly and the MHL Hotel Collection for an undisclosed amount, believed to be in the region of €50m. Mr O’Reilly has been the joint owner of the hotel since it opened in 2001, while the MHL Hotel Collection already own a number of hotels, such as The Westin and The Intercontinental in Dublin. The hotel contains 261 rooms and suites, a thermal spa and extensive conference and leisure facilities. Rezidor operate the hotel under the existing management agreement, with this arrangement expected to remain unchanged following the sale of the hotel. The Irish Times, 11th October
Clonmel Park Hotel: JLL is guiding in excess of €4.8m for the four-star Clonmel Park Hotel in Clonmel, Co. Tipperary, which is being sold by the Poppyfield Hotel Consortium. The property is being sold with effective freehold title and is subject to an occupational lease with a national hotel operator. The hotel contains 99 bedrooms, has an established trading history and a well-invested full service offering. Facilities include conferencing and banqueting rooms, a restaurant, leisure centre and spa. The hotel enjoys a highly accessible location in Clonmel, Tipperary’s largest town. The Irish Times, 12th October
O’Callaghan Hotels: Noel O’Callaghan’s hotel group, O’Callaghan Hotels (OCH), is to spend c. €30m refurbishing three of its Dublin hotels. The hotels being refurbished are the Stephen’s Green Hotel, the Alexander and the Davenport, all of which are four-star and located in the city centre. The Alexander hotel is the first hotel being renovated, and works are expected to be completed by the end of the month, with the hotel also being renamed The Alex. The Stephen’s Green Hotel will also undergo a name change, being renamed as The Green. Work on the Stephen’s Green Hotel and the Davenport is expected to commence before the end of the year. OCH also owns the MontClare Hotel in Dublin, the Tamburlaine Hotel in England and the Elliott hotel in Gibraltar. The Irish Times, 17th October
Clonshaugh Hotel Application: An Bord Pleanála has refused planning permission for a large scale hotel development in Clonshaugh in north Dublin. The Bord upheld appeals from several local residents in refusing planning permission for the proposed 427-bedroom hotel, which would have been located on a site near Clonshaugh Road, close to Dublin Airport. The application was lodged by Carra Shore Hotel Ltd, and the planned 10-storey building consisted of 317 bedrooms, 110 suites, leisure facilities, meeting and conference rooms, and car parking for c. 440 vehicles. Fingal County Council had previously granted planning permission for the project. The Irish Independent, 13th October
RESIDENTIAL / LAND
North Docklands Site: Savills is guiding €27m for a 5.2-acre site in Dublin’s north docklands which has potential to accommodate c. 400 apartments. The site is being sold on the instructions of the receiver, Duff & Phelps. The site fronts on to East Road and is within walking distance of the Luas Red Line and the Docklands Railway Station. Although there is no planning permission for the site, a feasibility study by O’Mahony Pike Architects has shown potential for c. 400 apartments, ideally suited for the private rental sector. The site is currently occupied, but vacant possession is available from August 2018. The Irish Times, 11th October
Dublin 1 Development Site: Knight Frank are guiding €14m for a 0.87-acre cleared development site in Dublin’s north inner city. The site is located in a busy shopping area between Upper Abbey Street and Strand Street Great. It is likely that the site will be used to develop a new office block, student accommodation or a hotel. Dublin City Council previously granted planning permission for a 10-storey mixed-use development including a 309-bedroom hotel, a retail unit and a bus interchange. This was amended in 2009 to increase the hotel size to 344 bedrooms and 12 suites. Both planning permissions expired during the economic downturn, however a feasibility study by RKD Architects proposes different uses including office, hotel or student accommodation, all with a retail element. The hotel option would contain 303 bedrooms, while a student accommodation complex could accommodate 420 bedrooms. The Irish Times, 11th October
Development Land Transactions: The Irish Times cites figures from CBRE which show that in the first nine months of 2017, there were 79 development land sites sold for a combined value of €456m. According to CBRE, this figure includes 29 sites sold in Q3 which had a combined value of €187m. The Irish Times, 10th October
Santry Development Site: Over the next few weeks Dublin City Council is expected to seek a development partner for a greenfield development site capable of providing 640 homes in Santry in north Dublin. The 42-acre site, which is to the East of the Port Tunnel, is expected to include a mix of private (50%), social (30%) and affordable (20%) housing, in addition to retail units and potentially a hotel also. The project is to be completed in five phases, with the first phase set to contain the largest number of units developed in a single phase, at 225 units. The Irish Times, 17th October
ICare Housing: David Hall’s ICare is in talks with multiple lenders to acquire buy-to-let properties on their loan books, in an attempt to keep the tenants in the properties from being evicted. ICare wants to work with the tenants to keep them in situ, rather than having banks dispose of the buy-to-lets by way of a loan sale and risk the possibility of the tenants being subsequently evicted. The non-for-profit organisation launched their first fund last month, which will target family-home mortgages for people who qualify for social housing. Per the latest figures from the Central Bank, there are more than 14,000 buy-to-let mortgages in arrears of more than two years. The Irish Independent, 15th October
CSO Rental Inflation: The CSO’s latest figures on private residential rents, which is based on new tenancies only, shows that rental inflation was 0.7% in the month of September 2017, with annual inflation at 6%. This figure is well below the inflation figures of 11% and 10% recorded in 2015 and 2016, and is the lowest rate of inflation for four years. NAMA Wine Lake, 16th October
House Prices: New figures from the CSO have shown that residential property prices have increased by 12.2% in the year to August 2017, a substantial increase on the 7.6% rise in the 12 months to August 2016. Prices in Dublin rose 11.9% in the year to August 2017, with house prices rising by 11.7% and apartments rising by 11.6%. Outside of Dublin, prices rose by 12.6% during the year, with the West region showing the biggest growth (15.4%) and the Midwest region showing the lowest growth (9.6%). Despite the recent increase in national property prices, prices are still c. 25% lower than they were in 2007. The Irish Times, 12th October
Dublin 2 Development Site: Oakmount has acquired a 0.35-acre site on the corner of Lennox Street and South Richmond Street in Dublin 2, and is due to begin construction of a mixed-use building in the coming weeks. The company acquired the site with full permission from Marlet Property Group earlier this year, and is making various minor amendments to the existing planning permission. The site had been guiding €7m. Upon completion, the four-storey, over-basement structure will extend to c. 41,000 sq. ft., including c. 20,000 sq. ft. of Grade A office space, a c. 7,000 sq. ft. basement gym, a ground floor retail unit of the same size and a number of parking spaces. The new development is on the border of Dublin 2 and Dublin 8, in close proximity to the Harcourt Luas stop. The project is one of several that Oakmount currently has either at planning stage or under construction. The Irish Times, 10th October
Rush Development Site: REA Grimes and WK Nowlan Real Estate Advisors are guiding €5.75m for a ‘ready-to-go’ residential development site located in Rush, north Dublin. The c. 15-acre site comes with full planning permission for 129 family homes, which could be on the market by mid-2018. The Irish Independent, 12th October
Cork Development Site: Developer Donal Relihan of DNR Homes has purchased a 4.6-acre residential development site on the Model Farm Road, which is on the outskirts of Cork City, for an undisclosed amount, believed to be in the region of c. €3.5m. The site had discretely gone on sale over the summer with a guide price of €2.8m – €2.9m, and was sold by the Church of Ireland’s Carrigrohane Parish. The Irish Examiner reports that the site may be used to develop a scheme of 35 – 40 upmarket homes, with the land having been zoned ‘Residential’ in the Ballincollig / Carrigaline Local Area Plan (LAP). The Irish Examiner, 12th October
Gardiner Street Application: GSA Developments (Ireland) Ltd has sought planning permission from Dublin City Council to use its recently completed 520-bed student accommodation development for “tourist or visitor” accommodation during the part of the year which is outside of the academic term. NAMA Wine Lake, 15th October
INDUSTRIAL
No. 3 Parkmore West Industrial Estate: Offers in excess of €4.7m are being sought by TWM for a modern commercial building in Galway, which is occupied by the US medical devices group Creganna Medical Devices at a rent of c. €431k p.a. The building extends to 74,000 sq. ft. and is occupied by Creganna under a lease which has c. 24 years left to run, and upwards-only rent reviews. Based on the guide price, the investment would offer the new owner an initial return of 8.78% once acquisition costs are accounted for. The Irish Times, 11th October
Lacken Road Business Park: Joint agents Savills and REA McCormack Corish are guiding €2.25m for three fully occupied modern commercial buildings located in Lacken Road Business Park, which is located on the outskirts of Waterford City. The buildings are let to Harvey Norman, Waterford / Wexford Training & Education Board, Irish Pride Bakers and the Brothers of Charity. The combined rental income for the three buildings is €331k p.a., with Harvey Norman paying the highest rent at c. €126k p.a. The Irish Times, 10th October
OTHER
Apple Data Centre: The Commercial Court has cleared Apple to develop a data centre in Athenry, Co. Galway, in what will be the first phase of a planned €850m development. Mr Justice Paul McDermott rejected two judicial review challenges to the planned centre, the first of eight such centres that Apple may build over a 15-year period. Plans for the centre were first unveiled in February 2015 on the same day Apple unveiled plans to build another facility in Denmark, which has now been completed. The centre is being developed by Apple to deal with the growth in demand for data processing and storage. The Irish Times, 12th October
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