13th December (Issue 377)

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.



Molesworth Street, Dublin 2 The Murtagh family is poised to buy Buswells Hotel in Dublin City Centre for c. €22m. It is understood that the family has been in exclusive negotiations to buy the hotel for a number of weeks. The last accounts for the business filed in the Companies Office indicate that the hotel made a loss of €1.1m in 2020. The company was budgeting positive earnings last year. It made a profit of €900k in 2019. The Sunday Times, 11th December

Fade Street, Dublin 2 The landlord of the Market Bar in Dublin City Centre has objected to a proposed 280 sq. ft. expansion of the venue on the grounds that it would turn the popular venue into a “super-pub”. In September, Mercroft Taverns Limited, which operates the bar on Fade Street and the adjacent Chelsea Drugstore on South Great George’s Street, sought permission from Dublin City Council to open a new “tasting room” in the venue. The room, which would have space for ten people, would be created in part of a retail unit in the George’s Street Arcade that backs onto the current Market Bar premises. The Dublin city development plan has specifically outlined that so-called “super-pubs will be discouraged”. In November, the council gave the operators of the Market Bar permission to proceed with the tasting room on the basis that it “will likely create more variety and vibrancy within the premises”. The planning board is expected to make a decision on the expansion by April 2023. The Business Post, 10th December

Licensed Property Market To date in 2022, there have been 27 pubs sold in Dublin with a capital value of just over €91m, slightly ahead of the figures for 2021, when 23 pubs changed hands with a capital value of €85.65m, according to John Ryan of Bagnall Doyle MacMahon. The start of the year witnessed a brisk level of activity highlighted in particular with the completion of the sale of the TP Smith portfolio (The Auld Dubliner, The Norseman, TP Smith’s, Laguna and The 44) for a sum that was undisclosed, but is speculated to have been €34m. While activity in the second half of the year slowed considerably, the remaining two pubs in the Quinn Hospitality portfolio – JW Sweetman, Burgh Quay and The Barge, Charlemont Street – were offered for sale in the autumn, with JW Sweetman purchased for more than €5m while The Barge, at the “contract-signed, awaiting-closing stage”, achieved just below the guide price of €3.7m. There are several other pub sales either sale agreed and close to signing or at an advanced stage of the negotiating process. There are, however, some concerns on the horizon, such as the rapidly rising energy costs, food and beverages cost increases, skilled staff shortages and rising interest rates. The Irish Times, 7th December



Stephen’s Green, Dublin 2 Stephen’s Green Shopping Centre in Dublin City Centre is poised for a large expansion that will add two storeys to the existing structure, reducing the existing retail space and introducing offices. The investment will likely run to well in excess of €100m. A fund operated by the stockbroker and wealth manager Davy is preparing to submit a planning application for the redevelopment. Davy had been expected to redevelop the centre after paying a reported €175m for it on behalf of clients in 2019. The extension will bring the size of the building to just under 1m sq. ft of space, from c. 770k sq. ft. Shops, restaurants and cafés will occupy the ground and first-floor levels. Retail space will be reduced to 205,000 sq. ft, while there will also be a drop in the space given to existing cafés, restaurants and bars. More than 375,000 sq. ft will be offices. The owner also intends to reduce the number of car parking spaces by 138 to 551. The Sunday Times, 11th December



Retail Sector Rising prices, inflation and higher energy costs have impacted retailers and consumers alike during 2022, according to Eoin Feeney of Colliers. Consumer sentiment has fallen sharply, but we have not seen a significant corresponding decline in retail sales, which are still well above February 2020 (pre-Covid) levels. Covid, Brexit and UK company voluntary arrangements (CVAs) combined over 2020 and 2021 created an unprecedented spike in Irish retail vacancy levels. The hardest hit was the high-street sector. This time last year, 16 units (11% of total retail floor space) were vacant on Grafton Street. A host of leasing transactions during the year has brought vacancy down to a current level of six units (5.4% of retail floor space). Henry/Mary Street is lagging behind its southside counterpart and vacancy issues still exist. One of the largest retail buildings in Dublin city centre, the former Debenhams department store, remains shuttered. Vacancy here has fallen from a peak of 11 units (22% of retail floor space) to a current level of eight units (19% of retail floor space). Footfall has strongly rebounded in the main shopping centres and in many cases has exceeded pre-pandemic levels. This has been a record year for take-up in the larger suburban schemes with numerous major space user and anchor lettings or announcements. Rental growth will be a feature in many retail property subsectors in 2023. This is inevitable as strong occupier demand leads to competition between retailers to secure the limited number of better located and configured retail opportunities. The Irish Times, 7th December

Blanchardstown, Dublin 15 Flannels, owned by Frasers Group, is set to open its first store in Ireland, at Blanchardstown Centre in Dublin. The new space occupies 30,000 sq. ft and is located at the former Debenhams area on the ground floor. Flannels’ opening follows the recent unveiling of global brand Zara’s biggest store in Ireland, also at Blanchardstown Centre, which spans 52,000 sq. ft of retail space. React News, 12th December



Ballsbridge, Dublin 4 Meta has decided not to occupy Fibonacci Square in Dublin and will sublet 375,000 sq. ft of the development as part of a scaling back of plans for its European headquarters. The company had signed a 25-year lease on the development at the former AIB headquarters but has now instructed agents to sublet the blocks. Meta already occupies another part of the Ballsbridge campus and has begun moving staff there from its Grand Canal office building. The Business Post, 8th December

Office Market Significant increases in employment over the last two years along with the lifting of Covid-19 restrictions at the beginning of the year, resulted in a strong recovery in occupier activity, with take-up for 2022 on course to reach 2.5m sq. ft – equalling the market’s 10-year average according to Declan O’Reilly of Knight Frank. Demand for new space in city-centre locations led the way in 2022 as occupiers increasingly recognised the need to meet ESG targets and to create best-in-class workplace environments to attract and retain talent. In terms of supply, there were considerable delays with the delivery of space between 2020-2022, with some of those delayed schemes due to come to the market in 2023 – 2.1m sq. ft of space will be delivered in the city centre, of which 31% is pre-let. The combination of more cautious demand and additional supply is expected to place some downward pressure on prime rents, which are likely to slip to €65 per sq. ft throughout 2023. The Irish Times, 7th December



Rathcoole, Co Dublin The developers behind Dublin’s Greenogue Logistics Park have secured the largest, single industrial transaction of the year with an agreement to pre-let a new purpose-built warehouse to Irish-listed healthcare group, Uniphar. The new facility, which is being developed by Castlebrowne on behalf of Jordanstown Properties, will, upon completion, comprise 322,000 sq. ft of area. The Irish Times, 7th December



Housing Applications, Ireland Up to 35k homes are being held up in the planning system due to delays at An Bord Pleanála, according to figures from the Irish Home Builders Association (IHBA). No decision on strategic housing developments (SHDs) has been made since the end of October, after the board’s chairman took early retirement. Under regulations, the remaining four active board members are not allowed to make decisions on SHDs or strategic infrastructure developments. Since July, the board has decided on 563 cases, compared with 1,034 in the same period last year. The Sunday Times, 11th December

Housing Commencements There has been a decline in the number of new homes started over the past year. The rate of new homes being built on a rolling 12-month basis reached a high of 34.8k in March this year but has been in decline ever since. The number of new homes being built on a rolling 12-month basis fell to 27k at end of November 2022, compared to 30.5k this time last year. Despite the annual decline, the MoM drop off in new homes being commenced was reversed in November, when more than 2.5k new homes were started. Notices filed by developers with the Building Control Management System (BCMS), which are a signal that construction work is due to begin, showed a number of large apartment projects were commenced last month. The spate of new apartment developments being built has come at a time when many other developers have warned they will struggle to begin their own projects due to soaring construction costs and a lack of finance. The Business Post, 10th December

House Prices House prices would fall by 12% if 10k new private market homes were built annually, but climate change commitments are likely to hamper any move to boost supply, new analysis by the Economic and Social Research Institute (ESRI) has shown. The government has projected that 24k new homes – which includes social, private and one-off housing – will be built in 2022. Despite an increase in housing supply in recent years, CSO data has shown the number of new homes for sale on the open-market has stagnated at c 7.5k annually. The report by the ESRI further concluded that if overall completions rose to 35k a year, profits of construction firms would also increase by c. 0.6% and construction wages would rise by c. 1% in the long run. The Business Post, 9th December

Short-Term Letting No limit has been placed on the number of short-term letting licences that can be issued by Fáilte Ireland. Last week Catherine Martin, the Minister for Tourism, announced that property owners would be required to register each home they listed on websites such as Airbnb and Booking.com, and secure a licence from Fáilte Ireland, from early 2023. The new system has been set up in a bid to improve the regulation of 30k homes in the sector, and to potentially return up to 12k illegal short-term lets to the residential market. Property owners who let short-term without a licence could face a €300 fine. The bill has also redefined a short-term let as any property let for between one and 21 days at a time. The previous limit was a property let between one and 14 days. Residents are currently allowed to let their entire principal private residence on a short-term basis for a cumulative 90 days each year. If the 90-day threshold is breached, planning permission is required. If a house is not a person’s principal residence, the 90-day exemption does not apply, and planning permission is required. The Business Post, 12th December



BNP Paribas Report Irish construction activity decreased for the second month running in November as demand weakened amid ongoing inflationary pressures. The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index dipped to 46.8 in November from 47.4 in October, posting below the 50.0 no change mark for the second month running to signal back-to-back declines in total construction activity. Anecdotal evidence suggested that a drop in new orders and a market slowdown were behind the fall in activity. A combination of lower demand and price pressures led construction firms to make efforts to reduce stock holdings. BNP Paribas ROI Construction PMI, 12th December


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