13th June (Issue 401)
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
Blanchardstown Centre, Dublin 15 Goldman Sachs has appointed Eastdil Secured and CBRE to find a buyer for the Blanchardstown Centre. The proposed disposal of the west Dublin scheme, the largest shopping centre in the country, is expected to carry a guide price of €650m-€725m. Industry sources have estimated that a sale at this level would see the Wall Street investment giant incurring a loss of €25m-€100m on its investment before any allowances for rental income received or capital expenditure. Goldman Sachs acquired the Blanchardstown Centre for approx. €750m in December 2020, after striking a deal with the scheme’s previous owner, Blackstone. Blackstone paid approx. €950m in 2016 to secure ownership of the complex from Green Property. Blackstone’s purchase of the Blanchardstown Centre is believed to have been financed originally with €250m of equity, with the balance being a combination of traditional senior debt and mezzanine financing provided by a syndicate of lenders that reportedly included Morgan Stanley, AIG, AIB and Goldman Sachs. The Blanchardstown Centre comprises approx. 1.2m sq. ft of retail space distributed across 180 shops. The Irish Times, 7th June
Tallaght, Dublin 24 The American owners of the Square Tallaght are preparing to put the Dublin shopping centre on the market later this year for approx. €170m. Oaktree Capital, the US private equity company, bought the Square from Nama in 2019 for €250m. The Square, which is managed by Sigma Retail Partners, scored a significant coup last year when Penneys opened in the old Debenhams unit. The mall has 570,487 sq. ft of shopping space distributed over more than 130 outlets and a Movies@ cinema. Indego, one of the Square’s operating companies, was granted an extension to planning permission for a 231,316 sq. ft extension at level two and a six-storey car park, but it is due to expire next year. The Sunday Times, 11th June
Dundrum Town Centre, Dublin 14 The owners of Dundrum Town Centre have just over a year to refinance the south Dublin mall’s €600m loan. Accounts filed in November for Dundrum Retail GP — which is jointly owned by Hammerson, the British property company, and Allianz, the German insurer — say that the debt is due for payment in September 2024. A May 2022 valuation for Dundrum Town Centre found it was worth more than €1bn. The company has a LTV ratio of 56% and said it did not expect the valuation to fall below the default LTV level of 70% on its loans. However, in 2021, rental arrears meant that it did not meet its default covenant tests and the company paid over all surplus cash to the banks under a so-called cash trap. Hammerson and Allianz are still waiting to hear whether they will be granted permission to build 881 apartments in the south Dublin village. The case was due to be decided by An Bord Pleanála in July 2022 but has been delayed. The Sunday Times, 11th June
OFFICE
Ballycoolin Business Park, Dublin 15 Having brought the Aurora Building at Ballycoolin Business Park in Dublin 15 to the market as a fully let investment for €16.5m in February 2020, Cushman & Wakefield is offering it for sale once more at a reduced guide price of €14m. On this occasion, the subject property, which comprises two interconnecting office blocks (Block A and B), extending to 121,482 sq. ft, comes with the benefit of full vacant possession. The property, which was occupied previously by Veritas Storage (Ireland) Ltd, a wholly owned subsidiary of Veritas Holdings Ltd, sits on a plot of 6.59 acres with 311 surface car parking spaces. The property is held by way of a 999-year ground lease and is subject to a nominal ground rent. The Irish Times, 7th June
Churchtown, South Dublin Hooke & MacDonald and Stapleton Property Consultants are seeking offers of €2.15m (NIY 9.1%) for Landscape House, Churchtown. Landscape House is a detached two-storey office building which extends to approx. 17,222 sq. ft and sits on a site of 0.6 acres. The property is let to Apleona Ireland Limited, Red Box Direct Limited and Flextime Limited at an income of approx. €215.3k pa. All of the leases expire by 2027. Apleona pays approx. 70% of the annual income of the building and has been in occupation since 2017 on a ten-year lease. The Business Post, 10th June
Earlsfort Terrace, Dublin 2 KKR, the US private equity group, has leased 40,000 sq. ft of office space in Dublin. Intercom has assigned a portion of its lease at Irish Life Investment Managers’ Cadenza building to the US investor, which will occupy three floors of the recently developed office block. Tech firm Intercom prelet more than 100,000 sq. ft at Cadenza at the end of 2019. React News, 7th June
RESIDENTIAL / DEVELOPMENT
Lucan, Co Dublin Fingal County Council has paid more than €3.6m for 60 acres of land with potential for residential development at Coldblow in Lucan, Co Dublin. The site is zoned for “high amenity” in the latest Fingal Development Plan, the aim of which is to “protect and enhance high-amenity areas”. The council is understood to have seen off competing offers from a range of developers, investors and farmers following a “best-bids” process overseen by Coonan Property. The Irish Times, 7th June
Dublin Airport The owners of a key Dublin Airport land bank now up for sale have privately suggested they expect it to fetch more than €210m in a sign the State airport operator faces a potentially large bill to bring the property into public ownership. Three connecting lots of land in the centre of the airport are being sold by brothers Ulick and Des McEvaddy; Seán Fox; and Brendan and Orla O’Donoghue. The property is being sold in its entirety or three separate lots. The site has been cast as an ideal location for a third terminal although senior airport figures believe such infrastructure won’t be required for another two decades. The guide-price valuation on the 260-acre property sets the expected price to approx. €800k per acre. That valuation is roughly half the €1.6m price per acre that the airport authority recently paid in a €70m deal for a car park site outside the airport campus. The Irish Times, 3rd June
Brennanstown Road, South Dublin Nama is selling a south Dublin site with potential for 370 homes and its guide price has been reduced since it last came on the market. Known as the Brennanstown plot, it is available in one or more lots and is situated off the Brennanstown Road between the villages of Cabinteely and Foxrock. According to market sources, the guide price has been reduced to approx. €18m for the whole 29.4 acres, which is €5m below the previous asking price of €23m. Lot 1, known as Druid’s Glen, comprises approx. 8.8 acres of residential development land and 11.1 acres of forestry land. It includes three houses: Glendruid House, a protected structure; Druid House and Knockanree House. Lot 2, known as Lehaunstown, consists of approx. 9.5 acres of residential development land, with a small portion zoned for town centre use under the Cherrywood Strategic Development Zone (SDZ). The Irish Independent, 8th June
Kilcullen, Kildare Jordan Auctioneers recently brought a development site in south Kildare to the market for €2.5m. Extending to 4.86 acres, it is zoned ‘New Residential’ under the Kilcullen Local Area Plan 2014-2020, which has been extended. The site overlooks the River Liffey. The Irish Independent, 8th June
Social Housing, Ireland Approx. 73% of new-build social housing units delivered last year came from the private sector, according to figures obtained from the Department of Housing. They show the Government funded the delivery of 7,433 social homes in 2022. The majority (54% or 4,026 units) were delivered by private developers in what are known as turnkey projects where the local authority or housing body enters a forward-purchasing arrangement with a private developer. A further 19% or 1,408 units were purchased from private developers under Part V of the Planning and Development Act, where 10% of a private scheme is acquired for social housing. The final 27% or 1,976 units were delivered directly by local authorities and Approved Housing Bodies (AHBs). The Irish Times, 8th June
Planning Permission, Ireland In the first quarter of 2023, the number of new homes approved by planning authorities in Ireland increased by 38% compared to the same period in 2022. A total of 11,659 homes received planning permission, with 53% being houses and the rest being apartments. This marked the third consecutive quarter where more houses than apartments were approved. Dublin accounted for 84% of the approved apartment permissions and 44.3% of the approved house permissions in the country. This indicates a strong concentration of new housing development in the capital city. It’s worth noting that although the number of planning applications approved for new homes decreased by 29%, the increase in approved homes was due to multi-development schemes where a single application covered multiple units. Furthermore, the SHD scheme saw an annual increase of 112.8% in the total number of approved homes. This scheme allows direct applications for developments with at least 100 residential units or over 200 student bed spaces. In Dublin, there was a substantial share of SHD approvals, contributing to the overall housing growth in the city. Overall, these statistics highlight the increased housing activity in Dublin, with a significant proportion of new homes being approved in the capital, particularly in the apartment sector. The Irish Times, 9th June
Leopardstown, Dublin 18 Two State bodies are involved in a “standoff” over the development of a prime site next to Leopardstown racecourse. The LDA wants to develop up to 2,080 homes on the land, which is owned by Horse Racing Ireland (HRI) and the local authority, adjacent to the famous racetrack. However, HRI is in the process of developing its own masterplan for the site, which is expected to include a range of amenities beyond housing – including a hotel and events centre, and the possibility of an equestrian sprint track. Such a plan would be expected to feature a housing element, but likely at a lower level than that envisaged by the LDA. In its Report on Relevant Public Land – a scoping exercise assessing how much housing could be built on State lands produced earlier this year – the LDA estimated that between 1,550 and 2,080 homes could be built on the site at an estimated cost of up to €535.5m. The Irish Times, 10th June
Milltown, South Dublin Ardstone is to lodge plans for a new €300m apartment scheme near Milltown in Dublin, months after An Bord Pleanála conceded a High Court challenge against a previous permitted scheme for the site. Ardstone subsidiary, Sandford Living Ltd, is to lodge a large-scale residential development application in the coming days with Dublin City Council for a 636-unit scheme. A statutory planning notice confirms that the 636-unit scheme is of a slightly lower density than the 667-unit SHD scheme that was previously permitted and then quashed. Ardstone bought the Jesuit Order lands at Sandford Road near Milltown for €65m in 2019 and received permission from An Bord Pleanála in December 2021 for a mainly build-to-rent apartment complex on the 10-acre site. The new planning notice confirms that the latest scheme is comprised of 227 one-bed units, 296 two-bed units, 26 three-bed units and 87 studios. The scheme – on a 10.53 acre site at Milltown Park, Sandford Road – is to include six apartment blocks, with the tallest rising to 10 storeys. The Irish Times, 9th June
BNP Paribas Real Estate Ireland Report Home-building in Ireland experienced a significant slowdown in May, with the Construction PMI for the housing sector measuring 43.9, marking the eighth consecutive month of decline. Construction price inflation reached 14% YoY by February, and while it has since eased, costs continue to rise. Material prices have stabilized but remain high. The commercial building sector grew in May, registering a PMI reading of 53.7, while civil engineering projects slumped to 43.9. Overall, the construction industry is expected to contract by 4% this year due to factors like increased interest rates, labor shortages, and high costs. However, new orders increased, indicating potential growth in the coming months. The Republic of Ireland’s population growth, foreign direct investment, and economic expansion continue to drive construction. BNP Paribas Real Estate Ireland Report, 12th June
Government spending on housing was more than €80m behind target in the first three months of the year, as the Department of Housing continues to struggle to use all its budget even in the teeth of the housing crisis. Minister for Housing Darragh O’Brien is due to give an update to Cabinet on spending by his department – and will tell them that when carry-over items from last year are included, capital spending is €83m behind the amount the Government budgeted for the first quarter of 2023. It emerged earlier this year that the Department of Housing failed to spend more than €1bn earmarked for housing over the past three years. With the economy suffering from so-called “capacity constraints” – factors such as the labour market, which is at full employment – Government departments are struggling to spend their entire budget, despite huge levels of tax flowing into the exchequer. While YoY spending in housing has increased, the figures to be shared with Cabinet show the nature of the challenge facing the Coalition is deeper than funding. Last week, it emerged the Department of Transport had underspent its capital budget by approx. €100m during the same three-month period. The Irish Times, 13th June
Ringsend, Dublin 4 Dublin city councillors have voted for the rejection of a deal with developer Johnny Ronan at the Irish Glass Bottle site in Ringsend which would see the number of affordable homes promised reduced from 15% to just 4%. In 2020, a consortium involving Ronan Group Real Estate, Oaktree Capital Management and Lioncor Developments was chosen as the preferred bidder to develop up to 3,800 apartments on the former industrial lands on the Poolbeg Peninsula. Under planning laws, 10% of the new homes must be sold to Dublin City Council for social housing. In May 2017, however, in order to secure councillors’ approval for the redevelopment plans, then Minister for Environment Simon Coveney agreed State funding would be made available for an additional 15% affordable homes. However, a deal negotiated between the council management, the Department of Housing and the consortium on the first phase of 570 apartments, while it would include 57 social apartments, would provide only 25 affordable homes, or just 4%. The Irish Times, 12th June
Ennis, Co Clare Permission for the largest private housing scheme proposed for Ennis, Co Clare, is being challenged in the High Court. The 289-unit strategic housing development is proposed by developer Glenveagh Homes Ltd for the outskirts of the town at Drumbiggle, Keelty. Clare County Council had recommended refusing the scheme, which is to comprise 199 three-bed houses, 78 two-bed homes and 12 one-bed maisonettes. In compliance with its obligations, Glenveagh proposes to sell 57 homes to the local authority. The Irish Times, 12th June
Clonburris, Co Dublin Planning permission is being sought by Cairn Homes for a €142m residential development of 565 units. The development, within a strategic development zone in Clonburris, Co Dublin, comprises the construction of 230 houses and 335 apartments. A decision is due in Q3 2023. The Business Post, 10th June
Fairview, Dublin 3 Planning permission has been approved for a €300m large residential development application at St Vincent’s Hospital, Richmond Road in Fairview, Dublin 3. The development includes the construction of 811 residential units, comprising a mix of one-, two- and three-bedroom apartments across a number of blocks ranging in height from two to 13 storeys. The project also comprises the construction of a brand new 73-bed hospital. The Business Post, 10th June
Old Cratloe Road, Limerick Planning permission has been granted for an €11m residential development on the Old Cratloe Road in Limerick for Riverpoint Construction. The scheme will see the creation of 86 residential units, split between 46 houses and 40 apartments. The Business Post, 10th June
Tullamore, Co Offaly Plans are in the pipeline for a Large-Scale Residential Development in Tullamore, Co Offaly. The project, for John Flanagan Developments, will see the construction of 148 dwellings in total, split between 58 apartments and 90 houses. A decision is due in late July 2023. The Business Post, 10th June
Loughmacask, Kilkenny Works have begun on the next phase of housing as part of a €21m residential development in Loughmacask in Kilkenny. This phase will see the construction of 10 houses out of a total of 112 proposed. Work originally commenced in early 2022 and to date 50 houses have commenced construction, with 17 complete. The Business Post, 10th June
Walkinstown, Dublin 12 Works are now under way on the construction of a €37.5m apartment development at the former CHM Premises on Ballymount Road Lower in Walkinstown, Dublin 12. The development for Montane Developments will see the demolition of the existing buildings on site and the construction of 171 apartments, café, crèche and landscaping works. The project consists of 61 one-bed, 103 two-bed and 7 three-bed apartments. The Business Post, 10th June
Leixlip, Co Kildare Coonan Property is handling the sale of a prime commercial development opportunity at Collinstown in Leixlip, Co Kildare, for which it is guiding in excess of €3m. The lands extend to 32.9 acres and are zoned in the Leixlip Local Area Plan 2020-2023 with the following objective: Q – Enterprise & Employment – to provide for and facilitate the provision of high job-generating uses. The Business Post, 9th June
OTHER
Commercial Real Estate Outlook, Ireland The Central Bank of Ireland (CBI) recently published its financial stability review, highlighting the strength of the Irish economy. However, concerns were raised regarding the commercial property sector. The CBI expects double-digit declines in commercial property values due to factors like higher interest rates, remote working, and weak business demand, with prices already down by 9.4% in Q1 2023. The office vacancy rate in Dublin stands at approx. 13%, comparable to other European cities, while US cities like San Francisco have experienced a 30% vacancy rate. The CBI warns that an oversupply of office space could lead to further price and rental declines, financial losses, and potential contagion effects on the wider Irish economy. Commercial property funds in Ireland have already reported nearly €500m in write-downs this year. While the impact on the broader economy has been limited so far, the situation remains a concern for the CBI and other financial institutions. The Business Post, 11th June
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