14th August (Issue 159)
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.
LOAN / PORTFOLIO SALES
Project Scariff: Ulster Bank have agreed the sale of a €1.4bn distressed loan portfolio, known as Project Scariff, to US investors, Cerberus Capital Management. The portfolio includes c. 2,300 owner-occupied home loans, as well as c. 2,900 buy-to-let mortgages secured on investment properties. More than half of the portfolio includes buy-to-lets with average arrears of c. €32,000 or 34 months of repayments. The owner-occupied loans in the portfolio are, on average, 83 months, or almost seven years in arrears and behind in their repayments by on average c. €61,000. Each loan has been through at least three forbearance procedures. Project Scariff is expected to be the last big portfolio sale undertaken by Ulster Bank, which has been restructuring its Irish assets for almost a decade, reducing its loan book by c. 60%. The Irish Times, 13th August
KBC Loan Book Sale: KBC has reduced its non-performing loan book from 36.5% to c. 25% following the sale of a portion of its bad loans to Goldman Sachs for €1.9bn. The portfolio comprised soured corporate loans and non-performing Irish and British buy-to-let mortgages. It was previously speculated that the Belgium-based KBC Group, would close down or divest its Irish subsidiary, but last year it announced that Ireland was now part of its core operations. KBC Ireland made a €115.9m net profit after tax and impairments for the first six months of 2018, compared with last year’s €173.1m with the decrease primarily because of reduced impairment provision releases. It has so far added 40,000 new customer accounts and new mortgage lending reached €422m, a 26.7% rise on last year. The Times, Irish Edition, 10th August
HOTEL
Miro Hotel 2, Dawson Street: Plans have been lodged for a €35m project that includes a 117-bedroom hotel and the redevelopment of one of Dublin’s oldest private members’ clubs on Dawson Street. Miro Hotel 2, which owns the Dawson Hotel, has launched plans with Dublin City Council, to develop the Dawson Hotel and adjoining site which is owned by the Royal Irish Automobile Club (RIAC). The automobile club, established in 1901, has two restaurants, a bar and a members’ reading room and library. It is envisaged that the club would vacate the premises by the end of June next year and that the works would be completed within two years. The new facilities would include a restaurant, bar, reading room, meeting rooms, offices for the club, Motorsport Ireland and the Guinness Seagrave Library. The Times, Irish Edition, 14th August
George’s Street Hotel, Dublin: Dublin City Council has approved plans by Grosam Properties for a 100-bedroom hotel on the site of the former Dockrells hardware store at the junction of South Great George’s Street and Aungier Street in the city centre. The development which will consist of five-storey over basement will retain its current façade and include a restaurant and three retail units. The site has lay vacant since late 2015. The Irish Independent, 12th August
RESIDENTIAL / LAND
Glenveagh Properties: Glenveagh Properties, one of Ireland’s largest housebuilders, has finalised plans to raise more than €200m. The company said that it had closed its offer for a share placing that will raise €213m (€205m after commission, fees and expenses). One third of shares have been allocated to qualifying existing shareholders and the transaction is conditional upon approval from Glenveagh’s shareholder base at an EGM. Glenveagh has previously indicated that the money will be used to take advantage of land-buying opportunities. The company has been one of the most active housing firms since raising €550m through an initial public offering last year. It has a portfolio of 42 sites with the potential for more than 10,000 housing units and it has 700 homes under construction. The Times, Irish Edition, 11th August
Development Land: A new study from Cushman & Wakefield, found that €375m worth of land was bought and sold in the first six months of the year across the greater Dublin area, Cork, Galway and Limerick. This was up by 59% compared to the same period in 2017. The surge was mainly driven by activity in the capital and its neighbouring counties of Kildare, Meath and Wicklow. Deals in this area accounted for 91% of the deals by value. Dublin accounted for the majority, with land worth €321m sold in the county during the first six months of the year. Outside of the capital, Cork is the most active market, with 30 sites worth a combined total of €30m changing hands during the first half of the year, a 25% increase in both volume and value terms year-on-year. The Times, Irish Edition, 10th August
Residential Market Update: According to latest figures from the Central Statistics Office, property price growth eased in June, with house prices advancing by 12%, down from 12.4% in May and 13.3% in April. In Dublin, prices rose by 9% in the year to end-June, with house prices lagging this increase, advancing by 8.4%, while apartment prices soared by 12.8%. Dublin city saw the greatest increases, at 12%, but in south Dublin, house price growth continues to taper, and it rose by just 5.9% over the same period. Across the country and excluding Dublin, prices were up by 15.2%, with house prices rising by 14.6%, and apartments by 20.3%. Prices in the mid-west advanced by a hefty 22.3%, but in the border region, house price growth has stalled, with an increase of 4.9% reported. The latest figures mean that house prices nationally are now 19.5% lower than their peak in 2007, while in Dublin, prices are 22.2% lower than their February 2007 peak. Across the rest of the country, prices are 24.2% off their May 2007 peak. From the trough in early 2013, figures from the CSO show that prices nationally have increased by 79.6%, with Dublin prices almost doubling, up by 92.7% from their February 2012 lows. Across the rest of the country, prices are now almost 75% higher than the low reached in May 2013. The Irish Times, 14th August
OFFICE
Cork Office Market: The latest Cushman & Wakefield Cork office leasing market recorded a very strong opening half to 2018. Following a positive first quarter, the Cork office leasing market activity gathered pace in the second quarter with 26 occupiers taking up space, amounting to c. 281,000 sq. ft. A large portion of this was made up of Apple’s occupation of its own 170,000 sq. ft. expansion in Hollyhill. This has brought take up in the year to date to c. 382,000 sq. ft., compared to just 88,000 sq. ft. recorded in H1 2017. The past twelve months have seen supply levels in Cork decline by 4.3%, to stand at c. 600,000 sq. ft. at the end of June, resulting in the vacancy rate falling to single digits for the first time in a decade, to 9.5%, from 10.2% at the mid-point of 2017. When signed and reserved space is excluded, the net vacancy rate falls to c. 6.7%. As a result of pre-let deals closing in Q2 2018, 87% of the space currently under construction in Cork is now precommitted. Cushman & Wakefield Market Report, 14th August
Belfast Office Market: Lisney, who recently handled the £15m sale of the Obel 68 office block in Belfast, have reported growing interest in the office rental market in the city, with the total rental take-up in the first quarter of 2018 increasing to 270,000 sq. ft. Prime office rents have also moved from c. £12.50 psf. to c. £21.50 in recent years and there are a number of office schemes planned where quoting rents will be upwards of £23 psf. Additionally, investment volumes have increased from £26m in the first half of 2017 to c. £70m in the first half of 2018.The Irish Times, 13th August
INDUSTRIAL
Dublin Industrial Market: A Knight Frank industrial market report has found there was c. 471,000 sq. ft. of industrial property transacted in Dublin in Q2, a 37% decrease in comparison to the same quarter in 2017. In total take up for the first six months of the year was c. 1.2m sq. ft. Demand for space was highest in Dublin South-West with the area accounting for 51% of take-up, followed by Dublin North-West with 43%. A number of new builds were delivered to the market in Q2 including at Horizon Logistics Park and Dublin Airport Logistics Park. While prime rents remain unchanged at c. €9.30 psf, secondary rents now stand at c. €5.50 – €6.50 psf. Prime industrial yields are unchanged at 5.25%. Knight Frank Market Report, 8th August
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