14th December (Issue 327)
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.
HOSPITALITY
Temple Bar, Dublin City Centre The Bad Ass Café in Dublin’s Temple Bar is being brought to the market with selling agent CBRE guiding €1.3m for the leasehold interest in the premises which comprises 4,520 sq. ft. over two levels and is run as a restaurant with a seven-day pub licence. The building, which is a protected structure, is situated on the corner of Temple Bar Square and Crown Alley. The business, which continues to trade, is now being sold on behalf of Benqueues Limited, run by Martin Tynan, who also owns Kennedy’s pub in Drumcondra. The Irish Times, 8th December
Liffey Valley, Dublin The operators of a TGI Friday restaurant and the landlords of Dublin’s Liffey Valley Shopping Centre are in dispute over the forfeiture of the restaurant’s lease following the non-payment of rent during the pandemic, the Commercial Court has heard. Tercina Liffey Ltd has operated the restaurant from Unit 5 of the shopping centre since entering into a lease with the landlords, BVK Elektra 2 Liffey Valley Phase 1 Icav, in 2016. Tercina claimed it was entitled to invoke a “rent cessor” provision of the lease in circumstances where it was entitled, because of government regulation, not to keep the premises open. The landlord says the restaurant failed to keep the business open in accordance with its lease during periods when it was permitted to do so under Covid regulations. The restaurant ceased trading on March 15th last year and did not resume at any time until September last, when the landlord took possession of the premises. The landlord contended the restaurant had been in a position to trade since June of last year. No rent payments were made after January 6th, 2020, the landlord says. In September 2020 the landlord used the rent deposit of €76,635 against the then rent arrears at that point, reducing the amount owed at that stage to c. €59k. An amount c. €328k was due in rent, service charges and insurance contributions as of July 1st 2021. In August, it served a forfeiture notice on the restaurant operators, and the next month took the premises back. Tercina Liffey then brought High Court proceedings against the landlord claiming, among other things, that no money was owed, that it was entitled to close and that it had suffered loss and damage, including the loss of the fit-out of the premises worth €1.75m. The Irish Times, 13th December
OFFICE
Ballsbridge, Dublin 4 Blackstone has agreed a deal to acquire a substantial part of Facebook’s new European headquarters in Ballsbridge, Dublin 4. The US private equity giant’s offer of c. €400m saw off intense competition from a range of parties, including Tishman Speyer and Deka Immobilien. The price agreed comfortably exceeds the guide price of €395m set when the investment was brought to the market last September. The deal, which is subject to approval from the Competition and Consumer Protection Commission (CCPC), will see Blackstone secure ownership of four buildings comprising 339,456 sq. ft. of office space within the wider 900,000 sq. ft. Facebook campus which is in the process of being delivered on the former AIB Bankcentre site. The properties were brought to the market by agent Cushman & Wakefield on behalf of the Serpentine consortium, a syndicate of private individuals and companies assembled by AIB Private Banking and Goodbody Stockbrokers. The highest-profile element of the campus will face on to Merrion Road and is being developed by Johnny Ronan’s Ronan Group Real Estate. Fibonacci Square, as it will be known, is expected to comprise 375,000 sq. ft. and has been fully let to Facebook on a 25-year lease commencing in 2022. The four blocks being sold by the Serpentine consortium are also fully let to Facebook, and offer a weighted average unexpired lease term of more than 15 years. The Irish Times, 8th December
INDUSTRIAL
Kilshane Cross, Dublin 11 International retailer Harvey Norman has signed a deal with Iput for 91,524 sq. ft. of space at the Irish property investment group and developer’s latest logistics scheme in Dublin. The Australian-headquartered furniture and household appliances giant has agreed to occupy the unit, which is under construction and due for delivery in November 2022, on a 20-year term. The facility is being built to the highest sustainability standards in the market with LEED Gold, BREEAM Excellent and BER A3 ratings. Unit 2 is one of four logistics buildings Iput is due to deliver as part of the wider 550,000 sq. ft. Quantum Distribution Park at Kilshane Cross. Outside of its delivery of unit 2, Iput has also commenced the development of unit 3 (178,000 sq. ft.) while construction of units 1 (206,000 sq. ft.) and 4 (73,000 sq. ft.) is expected to get under way in 2022. Harvey and CBRE have been appointed as joint leasing agents on the scheme. While Iput currently has a portfolio of 2.5m sq. ft. of logistics assets, the company has 870,000 sq. ft. of logistics space under development at Aerodrome Business Park and Quantum Distribution Park. The Irish Times, 8th December
RETAIL
Liffey Valley Shopping Centre, Dublin Property group Hines has secured planning permission for a €135m extension to the Liffey Valley shopping centre in west Dublin. An Bord Pleanála has granted permission for the extension in spite of opposition to the plan from the operator of a rival retail centre, The Square in Tallaght. The new plan, first lodged in March 2020, seeks to provide a contemporary mixed leisure, entertainment and retail extension to Liffey Valley that is to be centred on a large public plaza and creating a new east-west street at the centre. The extension is to be anchored by two large retail units to either side of the public plaza. A retail impact assessment lodged with the planning application stated that the extension would deliver an additional €128.65m in retail revenues for the Liffey Valley Centre by 2025. Last April, South Dublin County Council granted permission but the plan was stalled after The Square lodged an appeal with An Bord Pleanála. In its appeal, The Square Management Ltd argued that what was proposed was “wholly unsustainable and a continuation of an outdated car-based, 1980s-style mall template”. However, the appeals board granted permission after its inspector in the case concluded that the scheme would constitute an appropriate form of development and would not be contrary to the retail policy as set out in the council’s development plan. The Irish Times, 13th December
MIXED USE
Denny Street, Tralee A Munster private investor has paid €1.5m for a historic Tralee town centre building, which houses The Kerryman newpaper, an AIB commercial bank presence and three apartments. Getting a return of c. 11%, the new owner of 9-10 Denny St has secured the three-storey Georgian period building which earlier had accommodated the National Bank of Ireland (later, the Bank of Ireland) from a private investment consortium who, in turn, had bought it about a decade ago. The building — a listed property built in the early 1800s, on a very intact Georgian streetscape laid out in the early 19th century on the grounds of Tralee castle — was sold by Sherry FitzGerald Stephenson Crean (SFSC), had carried a €1.3m guide price, but sold for a sum over that, likely to be c. €1.5m. It has a total rental income of €159.4k, which includes €29.4k pa from three modern, good quality two-bed apartments built to the rear. The Kerryman is on a 20-year lease from June 2007, with current rent of €60k pa, with five-year reviews, while AIB is on a 20-year lease on the first and second floors, from April 2008 paying €70k pa, also with five-year reviews and the leases have a break option in year 10. The Irish Examiner, 8th December
RESIDENTIAL / DEVELOPMENT
Douglas Village, Cork City Planning permission has been refused for a major apartment scheme earmarked for Douglas Village. Sirio Investment Management Ltd has applied for permission to build three apartment blocks of c. 65 apartments, ranging from six to 10 storeys in height, as well as four retail commercial units. The development was proposed for the site of the former Permanent TSB on East Douglas Street and Main Street. The bank relocated to a corner unit by Circle K gas station some years ago. 45 of the apartments were to be “Build to Rent”. A residents’ gym and meeting room are also part of the proposal. According to the plans, the apartments were to be spread across three blocks, with 20 apartments in a four to six-storey block, 15 apartments in a six-storey block and 30 apartments in an eight to 10 storey block. There were also plans to upgrade the public realm and footpaths at East Douglas Street, as well as creating new vehicular access to basement car-parking from the Aldi car park. However, planners in Cork City Council this week refused permission for the development. The Irish Examiner, 9th December
Build-To-Rent Sector Concerns that Dublin City Council’s recently published draft development plan could curtail the supply of housing have been expressed by estate agents Savills. According to the agent, the draft plan “includes drastic changes in planning policy, particularly in relation to build-to-rent (BTR) and build-to-sell requirements regarding schemes of 100+ units. These will undoubtedly create additional challenges in the funding and delivery of residential schemes and these policies will be viewed unfavourably by the property sector and will likely prove counterproductive”. Build-to-rent developments of less than 100 units will not generally be supported. There are indications of a “general presumption against residential schemes that comprise 100% BTR units”, the agent further added. Residential schemes of 100-plus units may only have a maximum 60% BTR units. At least 40% of the units must be for sale (to the general public). The Irish Independent, 9th December
Parkside, Dublin 13 Cairn Homes Properties has lodged plans for a €131m apartment development at Parkside 5B, Parkside in Dublin 13. The proposed development will measure over 699,654 sq. ft. and will include the development of 763 apartment units over nine-storeys in height, alongside a crèche facility and retail units. The Business Post, 12th December
Donaghmede, Dublin 13 Belwal has been granted permission for a €55m apartment scheme at the former Columban Missionary Site, Hole in the Wall Road in Donaghmede, Dublin 13. The development will include the construction of 413 apartment units ranging from five to seven storeys in height. The Business Post, 12th December
Development Updates, Ireland Works are expected to begin in December 2021 for the construction of a €3.6m two-storey multi-purpose community building (25,989 sq. ft.) at Murroe, Co Limerick. Works are expected to take c. 18 months to complete. Elsewhere, works are under way on the construction of Phase 2B of the Housing Development at Churchfields at Mulhuddart in Dublin 15. The scheme consists of the construction of 67 residential dwellings and associated site works consisting of six one-bedroom units, 17 two-bedroom, 34 three-bedroom and 10 four-bedroom units in 12 blocks, arranged in groups including single, double and three storey arrangements. Meanwhile in Blackpool Co Cork Eichsfeld Limited has lodged an SHD application for the construction of 191 build-to-rent apartment units. The development to be known as Distillery Quarter will measure in excess of 139,930 sq. ft. and has an estimated cost of €23.7m. The Business Post, 12th December
Help to Buy Scheme, Ireland The government’s Help to Buy scheme has supported c. 30,000 new home owners. Of the more than 7,000 new home sales Sherry FitzGerald managed over the past five years, more than 80% have been below the Help to Buy threshold. The Business Post, 12th December
Residential Property Prices A significant lack of supply, coupled with a big increase in household savings, has seen property prices skyrocket over the past year. In June, MyHome.ie published the Property Price Report for Q2 2021 reporting an asking price inflation of 13%. Asking price inflation is the most reliable lead indicator for actual property prices, and predictably, CSO figures released last month showed that there had been a 12.4% increase in residential property prices nationwide in the year to September 2021. Last month, the CSO reported that the volume of transactions in September was up 14.3% on August and by 34.8% compared to September 2020. Existing houses accounted for 86% of transactions, a rise of 43.2% over the year, while new homes accounted for 14%, which was flat compared to last year. The Banking and Payments Federation Ireland (BPFI) said there were 11,479 mortgage drawdowns in Q3 2021, valued at €2.8bn. This means volume was up by 40.9% year on year and the value of mortgage drawdowns was up by 42.3%. This activity is reflected in the level of interest in the market: MyHome.ie website traffic has increased by 40% over the course of the pandemic. In addition, and according to Ulster Bank’s construction purchasing managers’ index, the sector expanded for the sixth consecutive month in October 2021, despite the increase in the cost of building materials. The Business Post, 12th December
Ireland’s Vacant Site Levy System, which imposes penalties on land that is not developed for housing, is being hampered because landowners can appeal the charge at every step of the process, according to a senior Dublin City Council official. The levy will be replaced in two years by a new tax on land hoarding, which will introduce 3% levy on vacant land that is zoned for housing. The measure was announced as part of Budget 2022. Figures from the 2016 census, which were collected by CSO, indicated c. 30,000 vacant properties. The council expects CSO to take an “enhanced approach” to evaluate vacancy in the next census. The fragmented nature of Ireland’s strategy on derelict sites has resulted in a “haphazard” approach to solving the issue. The Business Post, 13th December
OTHER
Commercial Real Estate Investment 2021, Ireland All sectors of the market exceeded initial expectations throughout 2021. Overall, €3.5bn has transacted in the first nine months of 2021, twice that of the same period in the previous year and exceeds all of 2020 by €500m. An additional €1bn of investment in Q4 2021 is expected which will close the year off with €4.5bn across all sectors. This will be an increase of a third on 2020 and almost €500m more than the annual average from 2016 to 2020.
The private rented sector (PRS) accounts for 54% of all investment volumes during the first nine months of the year. This percentage will likely grow by year end with some prominent deals expected to be signed before the new year. Foreign investment with PRS deals consisted of more than 75% in the first nine months of the year.
It has been a record year for logistics and industrial, recording €450m for the first nine months of the year. Q3 2021 alone had €325m worth of investments which was more than any year on record. The sector is on course to exceed €600m by year end with a forward funding investment for the Penneys distribution centre in Newbridge, Co Kildare likely to be signed in the coming weeks.
Office investment volumes were unaffected by the pandemic. There was €827m worth of investments up to September which is in line with that of the same period in 2019 and 2020. An additional €400m has been transacted so far in Q4 2021 with the Serpentine Consortium’s Facebook headquarter site in Ballsbridge acquired by Blackstone.
Retail remains the hardest hit sector but 2021 showed signs of life with notable deals such as the €30m sale of the Citywest Shopping Centre, €18.5m sale of Bridgewater Shopping Centre and the sale of 26/27 Grafton Street for €25m, all of which were facilitated by JLL. The sector will outperform in 2020 but a full recovery is not expected to take place until 2022. John Moran, JLL, The Irish Times, 8th December
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