17th January (Issue 380)
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 2 The Wellington Hotel in Temple Bar in Dublin 2 has been brought to market for sale on the instructions of receiver Kroll Advisory through joint agents CBRE and Colliers. The turnkey 38-bedroom hotel is being sold by private treaty guiding excess €15m. The 38 bedrooms range in size from 140 to 250 sq. ft and a number of these overlook the Liffey. The Business Post, 14th January
Hatch Street, Dublin 2 Red Carnation Hotels is looking to sell its Dublin hotel development, Hatch Hall, for a guide price of €25m. CBRE has been tapped to market the property on Hatch Street in Dublin 2, which was originally earmarked by Red Carnation for its third hotel in Ireland. Full planning permission is already in place for the 60-bedroom, five-star hotel, which will be set over eight storeys. The redevelopment of the former chapel building will extend to 78,490 sq. ft and will also feature two bars and a restaurant. Offers for Hatch Hall are now invited to be received by 26th January. React News, 17th January
Grafton Street, Dublin 2 The firm that operates the Bewley’s café on Grafton Street has lodged a case in the Circuit Court seeking a renewal of its lease with Ronan Group Real Estate (RGRE). RGRE has disputed Bewley’s entitlement to a lease renewal based on alleged breaches of its previous tenancy agreement. Bewley’s Café Grafton Street Limited, whose 35-year lease expired last August, applied to the Circuit Court in November seeking a court order for its renewal. It is understood to have continued to pay full rent since the expiration of the lease. RGRE sought possession of the Grafton Street premises in 2020 over non-payment of rent, but that issue was resolved following mediation and the payment of arrears of €749k. The rent on the premises is c. €1.5m a year. The Business Post, 14th January
Smithfield, Dublin 7 Budget hotel brand easyHotel has officially opened its doors to its first Dublin hotel on the corner of Benburb Street and Wood Lane near Smithfield. The newly built 160-room hotel takes the group to 44 hotels across Europe, which are made up of owned, franchised and leased hotels across 11 countries. The Business Post, 14th January
Capel Street, Dublin 1 City ID, the Dutch hospitality group, is scaling back its planned tourist accommodation block on Capel Street in Dublin city centre. Last year, the firm acquired a derelict site on Capel Street located beside Jack Nealon’s pub. The site was sold to the Dutch group with planning permission in place for a 142-bedroom hotel which had been granted in 2020. City ID has applied to make changes to those plans which include building a 105-unit aparthotel on the site instead of the hotel. The Capel Street site was sold to City ID by Ringline Investments Limited, which secured the previous permission for the 142-bed hotel. The Business Post, 14th January
Liberties, Dublin 8 The developers behind a proposed co-living development in the Liberties area of Dublin have ditched their plans for the scheme, and now want to build a hotel on the site. MM Capital and SCIO Capital, two investment funds based in Ireland and London respectively, have asked Dublin City Council for permission to amend their approved plans for the complex. In 2019, a firm controlled by MM Capital and SCIO proposed to build 69 co-living units and 144 hotel rooms on the corner of New Row South and Fumbally Lane. During the pandemic, the London-based company went bankrupt and has been forced to abandon its international projects. An application by TC Fumbally Properties Limited to Dublin City Council said the operator which was previously in line to run the shared accommodation and hotel no longer operates. It added that Sonder is now in line to manage the development upon completion. TC Fumbally Properties said that Sonder does not operate co-living accommodation and has requested permission from the council to change the planned 69 permitted co-living units and amenity spaces into hotel accommodation. The changes to the development would result in a larger 235-room hotel. The Business Post, 14th January
Refugee Accommodation Two-thirds of hotels contacted about renewing contracts to host refugees have yet to sign new deals. Of the 141 accommodation providers contacted by the department whose contracts are expiring, only 51 have agreed to extend so far. A further 29 have raised queries which the department says are “being addressed”. The 141 provide 8.4k beds overall. Hotels and other forms of serviced accommodation are home to c. 46k beneficiaries of temporary protection (BOTP) – the status afforded to those fleeing the war in Ukraine under an EU-wide scheme. The hotels are being asked to sign up to a new contract that stipulates refugees must pay €10 per day for meals for adults and €5 for children, as well as pay for ancillary services like washing which had been provided for free. The Irish Times, 13th January
OFFICE
Lower Mount Street, Dublin 2 Knight Frank has brought Verschoyle House on Lower Mount Street in Dublin 2 to the market with a guide price of €13m. The sale offers investors the opportunity to acquire a refurbished Grade A office building of just under 17,222 sq. ft with secure income from two tenants. The largest of the two occupiers, the Pensions Authority (which occupies c. 80% of the building), is a statutory body set up under the Department of Social Protection. The Authority occupies the lower ground and first to fourth floors under two leases, paying a current rent of €668.4k pa. The ground floor is let to Ornua at a current rent of €213.5k pa. The building comes with eight basement car parking spaces. The investment produces a total income of €881.9k pa, with potential for a further increase following the settlement of the outstanding rent review on the third floor. The Business Post, 14th January
For lending terms on this asset please contact rossmetcalfe@origincapital.ie
North Wall Quay, Dublin 1 Ronan Group Real Estate (RGRE) has acquired Citigroup’s existing European headquarters on Dublin’s North Wall Quay. According to market sources, RGRE paid c. €140m to secure ownership of the property in the face of competition from UK-headquartered private equity property manager Henderson Park, and from Westridge Real Estate. The offices at 1 North Wall Quay were offered to the market by agent Knight Frank at a guide price of €120m last March. Once Citi’s workforce is ready to move into Waterfront South Central and vacate the company’s current premises at 1 North Wall Quay, RGRE will take ownership of the building. The Irish Times, 12th January
Serviced Office Sector According to Shane Duffy, managing director of Click Offices, the 9%+ increase in 2022 in serviced office desk numbers in Dublin alone to 34.5k from 31.65k the previous year was “almost double the increase that was expected”. The most sought-after area and the one with the lion’s share of serviced desks in Dublin – c. 21k of them – is in the Dublin 2 postcode. The Business Post, 14th January
MIXED-USE
Henry Street, Dublin 1 Dublin City Council has refused planning permission to developer Fitzwilliam Real Estate for a 12-storey, 159-unit build-to-rent scheme over part of the Arnotts store on Henry Street in Dublin. The council said its refusal is supported by a policy in the Dublin City Development Plan that there would be a general presumption against large-scale residential developments which are comprised of 100% build-to-rent units. The 159 units proposed by Fitzwilliam Real Estate were comprised of 60 studios, 85 one-bedroom apartments and 14 two-bedroom units. The scheme would involve the construction of a 12-storey-over-basement element fronting Williams Lane, a five-storey element over the Arnotts multistorey car park and a two-storey element over the Arnotts store. The Irish Times, 11th January
O’Connell Street, Dublin 1 The long-delayed redeveloped Clerys on Dublin’s O’Connell Street, which shut down c. eight years ago, is to be completed within weeks, with shops expected to open before the summer. In 2018 it was sold to a division of New York-based real-estate firm Rockefeller Group – Europa Capital, and its local partners, Derek McGrath’s Core Capital and Paddy McKillen jnr’s Oakmount, for a sum understood to be c. €63m. The old store and an adjoining building, now called the Clerys Quarter, has been undergoing redevelopment since 2019 as a retail, office, bar and restaurant complex, as well as a hotel. The Irish Times, 16th January
Hogan Place, Dublin 2 BNP Paribas has brought to market 19-20 Hogan Place in Dublin 2. The property comprises a four storey over basement, modern HQ office building (5,683 sq. ft) plus three one-bed apartments (355 sq. ft each) separately accessed from Eblana Villas. The entire building is being offered for sale by private treaty with vacant possession of the office element only. Each of the 3 apartments are fully let. BNP Paribas Real Estate, 11th January
STUDENT ACCOMMODATION
Purpose Built Student Accommodation (PBSA) According to the latest Cushman & Wakefield Irish Student Housing Report, growing student numbers and positive demographics within Ireland continue to underpin the fundamental demand for PBSA. In contrast to the growth within demand, supply has tapered, particularly in the Dublin market. As of Q3 2022, just one scheme was under construction in the Dublin market, meaning stock will remain relatively unchanged in the short term. The volume of bed spaces in the pipeline, either via pre-planning, plans submitted, or plans granted, on paper points to more supply to come on stream, however the realities currently appear different with uses and viability coming under scrutiny.
From an investment perspective, the student accommodation market has recorded an increase in activity over the past 12 months with €305m recorded across three deals of note. As there are a number of assets on the market at present, eyes will turn to their performance. A period of “price discovery” due to rising costs of debt and outward yield movement is being felt across all sectors, with PBSA not immune to this adjustment, despite the underlying strength of its occupational demand. Cushman & Wakefield Research
RESIDENTIAL / DEVELOPMENT
Construction Legislation Tax breaks for developers are now being considered as part of plans to activate 70k idle planning permissions for residential developments. According to market sources, the government is looking specifically at tax breaks for apartments rather than houses. There have been complaints that most large apartment schemes in recent years have been developed by institutional investors for the rental market rather than first-time buyers. There were lower standards for build-to-rent developments introduced in 2018, with less stringent storage requirements and more apartments permitted per floor. The Business Post, 14th January
Land Development Agency (LDA) The Government is facing a call for c. €1bn in additional funding for the LDA as the State body steps up interventions in the housing market. The organisation was promised €2.5bn at the outset – €1.25bn in capital from the Ireland Strategic Investment Fund and another €1.25bn in debt – and potentially another €1bn. The LDA already has agreements to back five private developers building 671 homes in Dublin, Cork, Wicklow and Waterford and is in talks with four others on plans that will bring to c. 1,000 the number of homes built under its Project Tosaigh initiative. The LDA separately has planning permission for c. 597 new dwellings on State lands at Shanganagh Dublin, 265 dwellings on State land at St Kevin’s Hospital, Cork, and for 219 units at Devoy Barracks, Kildare. Construction has commenced at Shanganagh and at St Kevin’s Hospital in Cork. Planning approval has been sought for a further 2,755 units on assorted sites in the Greater Dublin Area. The Irish Times, 16th January
Land Rezoning, Galway The Minister of State for Housing Peter Burke wrote to the local authority, directing it to change 26 separate elements of the newly ratified Galway City Development Plan 2023-2029, including the rezoning of a 3.2 acre site on the Headford Road. This large parcel of land, which is situated below sea level, is designated as a flood zone A area by the Office of Public Works. Despite objections from the Office of the Planning Regulator, councillors voted to ignore the recommendation of their own chief executive, Brendan McGrath, and rezone the Headford Road site for residential use during final deliberations over the city development plan in late December. The Irish Times, 15th January
Crumlin, Dublin 12 A community group is asking the High Court to overturn permission granted for the construction of 150 homes in Crumlin, Dublin. Bethmell Limited, which has a registered address in Walkinstown, Dublin, says An Bord Pleanála’s fast-track approval of the plans for the site of Glebe House is invalid for various reasons. The permission was granted to Seabren Developments Ltd. Last February the High Court quashed a previous planning permission granted to Seabren for the development of 152 units at the site. The Irish Times, 16th January
Housing Assistance Payment (HAP) The latest Locked Out report by the Simon Communities of Ireland shows there was just 41 properties available across the country for people on the HAP, although the number of properties available to rent at any price did increase. In the latest of the series of quarterly reports by the charity, 757 properties were available to rent in December, c. double the number available last September, but still far fewer than the 1,349 available in December 2021. The report comes amid record levels of homelessness, with 11,542 people in emergency accommodation according to latest monthly data. The number of properties available to rent increased for the first time in two years, but those attainable by those on HAP payments remains low, with 11 of the 16 study areas having no properties available to rent in any household category within standard or discretionary HAP limits. The Irish Times, 13th January
Landlord Exodus The exodus of landlords from the rental sector through selling up is putting households at immediate risk of homelessness, housing charity Threshold has warned. In its latest quarterly report, Threshold said that the threat of eviction is the greatest issue facing private renters in Ireland, but over half of eviction notices given to tenants in the last quarter of 2022 were invalid. The charity received 13.5k contacts from households through telephone or online between October and December 2022, and over one-third of queries came from renters who had received a notice of termination from their landlord. Of the clients who reached out to Threshold in Q4 2022, 1,837 were at risk of homelessness and landlords selling up was the reason in the majority of cases. The Irish Examiner, 17th January
Donabate, Co Dublin A local community group has initiated a legal challenge aimed at overturning planning permission for a development in Donabate, Co Dublin. Portrane Donabate Community Council is seeking judicial review of the permission granted by An Bord Pleanála to Aledo Donabate Ltd for the strategic housing development of 1,356 housing units, including c. 1k apartments, at Corballis East. The proposed development also includes a local retail centre, three creches, a reserved site for a new Gaelscoil and a 35-acre nature park. It is claimed most of the proposed residential units would not be in two-storey blocks in material contravention of the area development plan. The planning application proposed nine apartment blocks of five storeys, five apartment blocks of four storeys, a sheltered apartment block of three storeys and a significant number of three-storey houses and three- and four-storey duplex units. The Irish Times, 16th January
Sheriff Street Upper, Dublin 1 Dublin apartment developer Eagle Street has paused construction work at a major development site for more than 700 build-to-rent apartments in the city’s docklands. Its international funder – US asset manager Nuveen – is understood to be reviewing construction costs in the high interest rate environment. Eagle Street, run by former Glenveagh executive Shane Scully, has permission to build 700 apartments in blocks of up to 18 storeys on the former Castleforbes Business Park site on Sheriff Street Upper. The project backers still believed “in the viability of Dublin as a market” and felt the market here still had “significant tailwinds behind it and strong fundamentals”. But they were “currently just looking at the options, given the current pricing of construction, of what might be viable”. The Irish Independent, 15th January
OTHER
Cork UCC and the Tyndall National Institute have lodged an application for planning permission for the phased development of a new bridge and boardwalk. The project is designed to provide a shared pedestrian and cycle link between the existing Tyndall Campus at Lee Maltings on the south bank of the River Lee and the Distillery Fields on the north side of the River Lee. The proposals have been submitted to Cork City Council. A separate planning application for the construction of a new purpose-built research facility was lodged by UCC and the Tyndall National Institute, with plans including a seven-storey building comprising of research laboratories with support accommodation of seminar rooms, offices, exhibition space and a café. Following an appeal, the final decision on the planning is yet to be made by An Bord Pleanála. The Irish Examiner, 11th January
Santry, North Dublin Global healthcare group UPMC is acquiring the Sports Surgery Clinic (SSC), an independent hospital located in the north Dublin suburb of Santry. SSC will become part of UPMC’s network of orthopaedic, sports medicine and rehabilitation facilities, and will also become UPMC’s fourth hospital in Ireland, joining UPMC Whitfield in Waterford, UPMC Kildare in Clane, Co Kildare, and UPMC Aut Even in Kilkenny. Terms of the purchase were not disclosed. Latest accounts for SSC show that it made a pre-tax profit of €6.7m on turnover of €59.1m in 2021. It had accumulated profits of just more than €33m on December 31st, 2021. The Irish Times, 16th January
Bank of Ireland Real Estate Fund Bank of Ireland has blocked investor withdrawals from a €70m real estate fund “until further notice”, as commercial property markets continue to correct. The fund is described as “a pan-European fund of funds” targeting returns from third-party asset managers, with a portfolio of property assets located predominantly in Northern European cities. The move to restrict investor withdrawals comes as the bank has taken significant write-downs on the value of its main property investment fund, which has c. €1.2bn under management. The main fund has not been gated. Since September, the fund has lost more than 6% of its value and is down 15% since the start of the pandemic. The Business Post, 14th January
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