06th September (Issue 62)
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.
RETAIL
Coca-Cola Ballina: Coca-Cola has announced that it will invest €26m in its Ballina, Co. Mayo facility, creating an additional 25 jobs over the next three years. The investment will provide the facility with the tools necessary to manufacture their Coca-Cola Freestyle machine, which is a touch-screen soda fountain which has over 165 drinks options. These machines have been deployed in the US since 2010 and Coca-Cola plan to also make these available in Europe, with Ballina being used to manufacture them. Coca-Cola employ c. 1,750 people in Ireland. The Irish Times, 1st September
Harvey Norman: Harvey Norman has confirmed that it will open its fourteenth Irish store in Tallaght, west Dublin. The store will be located in a vacant retail park on Airton Road and Harvey Norman will spend c. €6m converting the property into a large retail unit. A Costa Coffee outlet will also be located on-site. For the 12 months ending June 2016, Harvey Norman had sales of c. €170m from its 13 Irish stores. The Irish Times, 1st September
Restaurant Rents: The Sunday Business Post reports on the increasing lease costs facing restaurant operators in counties such as Dublin, Cork, Limerick and Galway. Adrian Cummins of the Restaurants Association of Ireland says that a number of their member’s landlords are looking for rental increases of c. 50% – 60% at rent reviews. While this figure tends to be negotiated down, the low-margin nature of the business means that rental increases of 20%-plus can have a substantial impact on trading. The Sunday Business Post, 4th September
OFFICE
The Park, Carrickmines: Savills has been retained to manage the sale of four blocks at The Park in Carrickmines, Dublin 18, which together have a combined asking price of c. €40m. The largest property is The Herbert, which has a floor area of 85,564 sq. ft., an asking price of €24.5m (c. €286 psf) and offers a yield of c. 7%. The second most valuable block is the Hyde Building, where 33 of the 40 office suites are being sold for a combined amount of €10.5m (c. €300 psf). The Hyde Building will offer an initial yield of c. 6.18%. The third property is the Holborne Building, for which the rent is expected to be c. €320k p.a., offering a yield of c. 7.6% based on the €4m asking price. The final block for sale has rental income of c. €71k p.a., with AIB as the main tenant. The property offers a net initial yield of c. 6.8% based on the €1m asking price (c. €523 psf). The blocks are available to be purchased individually or in one lot. The Irish Times, 4th September
Swords Plaza: Cushman and Wakefield is seeking offers in excess of €14.5m for what is primarily an office / retail complex known as Swords Plaza, which is located on the main street in Swords, Co. Dublin. The complex has a floor area of 101,285 sq. ft., rental income of c. €1.56m p.a. and a weighted average unexpired lease term of c. 7.9 years. 67% of the complex is office space, 26% is retail and the remaining 7% consists of a 315-space car park and two apartments. Among the key tenants are ASL Aviation (€361k p.a.), McDonald’s (€160k p.a.) and DHL Express (€142k p.a.). The Irish Times, 31st August
Grant Thornton HQ: Grant Thornton has agreed to enter a lease for a property being developed at 13 – 18 City Quay in Dublin 2. The 118,000 sq. ft., eight-storey over basement property is expected to be completed in early 2018. Grant Thornton will pay a rent of €52.50 psf under a 25-year lease, which contains a break option. The cost of the development, which is being undertaken by a consortium of Oaktree Capital Management, the Bennett Group and NAMA, is c. €65m. Based on the c. €6.2m rent p.a. and the current market yield of 4.5%, the property would be worth c. €138m. NAMA Wine Lake, 4th September
26 Fitzwilliam Square: 26 Fitzwilliam Square has been sold by the agent Colliers International for over €2.8m, significantly above the €2.35m asking price. The 4,500 sq. ft. property includes six car spaces located to the rear of the property. The current rental income of c. €92k offers a net initial yield of c. 3.1%, while the sale price reflects a capital value of c. €625 psf. The Irish Times, 31st August
HOTEL
Hendrick Street Hotel: Dublin Loft Company Ltd has submitted a planning application for the development of a seven-storey, 175-bed hotel at 6 – 11 Hendrick Street in Smithfield, Dublin City Centre. The hotel will have a floor area of c. 60,000 sq. ft. and will replace an existing 3,000 sq. ft. property. Dublin Loft Company is controlled by Kelly, Andrew and Mark Cosgrave. NAMA Wine Lake, 4th September
Dalata Acquisitions: As part of their H1 2016 results announcement, Dalata has confirmed that they have acquired the freehold interest in the Maldron Hotel in Cork for c. €8.1m. The company has also acquired three properties adjacent to the Maldron Hotel Parnell Square in Dublin for c. €5m. For H1 2016, Dalata posted pre-tax profits of €18.2m and RevPAR increased by 11.2% to c. €74.90. RTE, 6th September
Herbert Park Extension: The owners of the Herbert Park Hotel have sought planning permission for a six-storey extension to the hotel. The extension will have a floor area of c. 12,000 sq. ft. and will see 32 bedrooms added to the hotel. The four-star hotel currently has 132-beds and is controlled by a company owned by the Kennedy and McSharry families. NAMA Wine Lake, 4th September
RESIDENTIAL / LAND
IRES Sandyford: IRES REIT has applied for planning permission to develop 492 apartments in Sandyford, south Dublin. The proposed development will be spread over three blocks on a 2.8-acre site. IRES acquired the site in April 2015 from CapReit (who established IRES in 2014) as part of the Rockbook Portfolio, for which they paid c. €90.6m. Philip O’Sullivan of Investec estimates that the cost of the development is €140m – €150m. IRES currently manage 2,377 apartments in Ireland. The Irish Times, 2nd September
Harolds Cross Apartments: The Adroit Company has sought planning permission from Dublin City Council to construct 121 apartments off the Harolds Cross Road in Harolds Cross, Dublin 6w. The apartments will be built in six 4 – 6 storey blocks on a c. 2-acre site. To facilitate the development, 53 existing residential units and a warehouse will need to be demolished. The Adroit Company is controlled by Martin, Mairtin, Patricia, Pearse, Anthony and Conor Lydon. NAMA Wine Lake, 4th September
Ballymun Houses: Dwyer Nolan Developments has sought planning permission from Dublin City Council to construct 106 houses on a site opposite IKEA in Ballymun, north Dublin. Dwyer Nolan purchased the site in 2007. NAMA Wine Lake, 4th September
Montrose Ziggurat: Savills is guiding in excess of €41.5m for the Montrose Student Residence on the Stillorgan Road in Dublin 4. The complex has 205 en-suite bedrooms spread over five floors, as well as 8,363 sq. ft. of commercial space on the ground floor. The commercial tenants include Bank of Ireland, Spar and Insomnia. According to Savills, the gross rental income is projected at c. €2.91m p.a., offering the acquirer an income yield of c. 5.4% after acquisition costs. The property is owned by Ziggurat Student Living, who reportedly spent c. €22.5m converting the property into student accommodation. The Irish Times, 31st August
Rathmichael Site: Bids of €2.125m are being sought by Knight Frank for a 2.23-acre site in Rathmichael, south Dublin. El Dorado, a 2,594 sq. ft. modern house currently occupies the site however there is also planning permission for three five-bedroom houses. The planning permission is in place until August 2018 and will allow El Dorado to remain on a 0.46-acre site while the three houses of 4,241 sq. ft. are constructed on sites ranging from 0.35 to 0.44-acres. The Irish Times, 31st August
19 Pembroke Road: Knight Frank is seeking offers of €4m for a 9,181 sq. ft. period house on a 0.34-acre site at 19 Pembroke Road in Ballsbridge, Dublin 4. The property currently has 11 apartments and three office units and is being sold with vacant possession. Planning permission was granted in May 2016 which will allow for the refurbishment of the main building, the demolition of an extension and the construction of 7,545 sq. ft. of new space. The site will offer 12 apartments once the approved development is completed. The Irish Times, 31st August
22 – 22A Earlsfort Terrace: QRE is inviting offers of €2.75m for a mixed use property at 22 – 22A Earlsfort Terrace in Dublin city centre. The 8,611 sq. ft. property contains five apartments and four office suites and is being sold with vacant possession. The Irish Times, 31st August
Modular Homes: The Government look set to spend between €250m and €400m on 1,700 modular homes in an attempt to reduce the social housing crisis. The Government has asked as many as 20 companies to supply the homes, which must be designed to last for 60 years as well as meeting current building regulations. Based on the €250m – €400m projected spend, the cost of the units will range from €147k to €235k. The 1,700 homes are to be completed by 2018, with 200 completed in 2016, 800 in 2017 and the balance in 2018. The Irish Independent, 31st August
July Mortgage Approvals: Figures from the latest Banking & Payments Federation Ireland (BPFI) report show that the number of mortgages approved for the three months ending July 2016, based on moving averages, was 3,274. This figure represents a 4.3% increase MoM and a 17.6% increase YoY. The value of mortgages approved in this period was c. €659m, a 6.5% increase MoM and a 28.5% increase YoY. However, when comparing the January to July period in 2016 with the same period in 2015, there is little difference in approval figures. Mortgage approval volumes in January to July 2016 were down 2.6% while values were 1.2% higher when compared to the same period in 2015. BPFI Mortgage Approvals July 2016
Housing Completions: New statistics from the Department of Housing reveal that 7,752 units were completed between January and July 2016, a c. 15% increase YoY. There has been a c. 42% increase in the number of units completed across the four Dublin local authorities in the period, with 2,254 units completed. Cork has also seen strong growth (c. 29%), with 927 units completed. The Irish Independent, 6th September
OTHER
CBRE Bi-Monthly Report: CBRE’s latest research report states that they are expecting to see significant activity in the Irish commercial property market in Autumn, while also noting that Brexit has had minimal impact on the market to date. Following c. 970,000 sq. ft. of take-up in the office market in H1 2016, a number of deals are set to close in Q3 2016. Therefore, the possibility remains that 2016 may match the record take-up levels achieved in 2015. The industrial sector was the one sector where take-up was down significantly in H1 2016 (c. 1,292,000 sq. ft. in Dublin – down 35% on H1 2015), however this decline is being attributed to the scarce availability of quality stock in core locations. CBRE Ireland Bi-Monthly Research Report, September 2016
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