18th January (Issue 330)

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.



Adelaide Chambers, Dublin City Centre Acquired by a German private equity investor for €7.32m in 2018, the Adelaide Chambers (19,369 sq. ft.) in Dublin city centre is being offered to the market at a guide price of €13m. The building’s vacancy rate is 14% with three tenants in place. The scheme’s annual rental income of €785.32k offers the prospective purchaser the opportunity to secure a 5.5% net initial yield. Adelaide Chambers comprises a four-storey-over-basement period building with a modern four-storey extension to its eastern side. There are also 31 basement car parking spaces as part of a wider mixed-use development. 63% of Adelaide Chambers is leased to Irish technology firm Decawave Limited. The company’s lease runs until July 2029 with a break option in July 2026. Decawave currently accounts for €578.87k – or 73.7% – of Adelaide Chambers’ €785.32k annual rental income. Sebela Ireland Limited, a subsidiary of US-headquartered drug developer Sebela Pharmaceuticals, occupies 14% of the building with the HSE occupying 9%. The selling agent Knight Frank says the only remaining floor to be upgraded/reviewed is the second floor which allows for further enhanced rental income growth. The sale of Adelaide Chambers excludes part of the third floor which is held and occupied under a long leasehold by the Croatian Embassy. The Irish Times, 12th January

For lending terms on this asset please contact rossmetcalfe@origincapital.ie

IFSC, Dublin City Centre Hibernia Reit is facing a significant loss after agreeing to sell the Forum building in the IFSC, Dublin, for a price less than €30m. Spear Street Capital is understood to be prominent in the bidding for the building which was on the market for €33m — considerably less than the €37.8m that Hibernia paid in 2014. Once the headquarters of German bank Depfa, the Forum was vacant when the Iseq-listed property company put it on the market late last year. The Forum, built in 2002, is expected to generate rents of c. €2m a year from its 47,100 sq. ft. of office space. Its 320 parking spaces, currently leased to a commercial operator, contribute an additional rent roll of €675k. The Sunday Times, 16th January



O’Connell Street, Dublin City Centre Flannels, part of Mike Ashley’s Fraser Group, has signed a deal to occupy half of the retail space that will be available at the redeveloped Clerys store site on Dublin’s O’Connell Street. The remaining 30,000 sq. ft. has been chosen by Swedish fashion giant H&M. The developers of the Clerys Quarter – Europa Capital and its local partners, Derek McGrath’s Core Capital and Paddy McKillen Jnr’s Oakmount – confirmed the agreement of the two deals. Due for completion in the final quarter of this year, the overall Clerys scheme will also comprise 92,600 sq. ft. of grade-A office space across two buildings, a 18,000 sq. ft. panoramic rooftop restaurant, bar and events venue, five new food-and-beverage units, including the newly refurbished tea rooms, and a new 213-bedroom four-star hotel. The Irish Times, 13th January

Dundrum Town Centre Irish retailer Penneys has confirmed plans to relocate to a bigger shop in the Dundrum Town Centre. Penneys plans to spend €14.8m on the new store. It will occupy the second and third floors of the former House of Fraser outlet, which closed in 2020. This will give Penneys 60,000 sq. ft. of retail space, an increase of 64% on the current outlet in Dundrum. Brown Thomas is refurbishing two other floors from the old House of Fraser site, which involves it relocating from its current BT2 outlet in the centre. The move by Penneys into this larger space had been flagged two years ago but the retailer paused the plan when the Covid-19 pandemic hit in March 2020. Penneys said the decision demonstrates its commitment to Irish bricks and mortar retailing and would allow it to offer a wider selection of fashion and beauty products, along with an expanded homeware department. Work will commence on the new store in the autumn and it will open in the early summer of 2023. The Penneys shop in Dundrum will remain open during construction. The Irish Times, 18th January



Carrickmines, Co Dublin The High Court has granted leave to a company to challenge a refusal of planning permission for a mixed-use apartment and commercial development in Carrickmines, Co Dublin. Last September, Dun Laoghaire Rathdown County Council refused permission to Carrickmines Land Ltd for 404 apartments, a supermarket, three non-retail commercial units, a gym and community space at Priorsland in Carrickmines Great and Brennanstown. The application to court was made ex-parte, meaning only Carrickmines Land was represented in court. Carrickmines Land says the decision was invalid because the council failed to indicate the main reasons for not accepting the recommendations to request further information. The Irish Times, 12th January

Blackpitts, Dublin 8 A trinity of property owners have come together to offer a substantial corner block in Blackpitts in Dublin 8 to the market for sale by Quinn Agnew. Nos. 21, 22 and 23 Blackpitts comprise three industrial/office buildings, which together extend to c. 24,649 sq. ft. on a site of c. 0.52 acres. The site is suitable for a variety of uses, and is zoned Objective Z1: “To protect, provide and improve residential amenities” in the current Dublin City Development Plan. While the site is a prime development opportunity, the buildings have quality fit-outs and could be let in the short or medium term while progressing with a planning application for development. Quinn Agnew is seeking offers in excess of €5.75m for the entire block. The Business Post, 16th January

For lending terms on this asset please contact rossmetcalfe@origincapital.ie



The Kilkenny Inn in Kilkenny is being offered to the market by joint agents JLL and Cushman & Wakefield at a guide price of €4.8m. Built in 2005, the three star hotel currently comprises 30 guest bedrooms. The hotel’s Kernel Bar & Restaurant is spread over two floors, with two bars serving residents and the public. It also includes a separate breakfast room and a meeting space within the Tower Suite. There are currently 25 car spaces available to the rear of the property. In 2021, the hotel was granted full planning permission for a 66-bedroom four-storey extension and ground floor cafe. The hotel is situated on Kilkenny’s famous “Medieval Mile” and is just a short stroll from the city’s popular nightlife scene, the Smithwick’s Experience and Kilkenny Castle, the latter of which attracts more than 800k visitors annually. With c. 1,250 hotel rooms available in the city and only 500 of those on offer within the Medieval Mile, the selling agents cite Fáilte Ireland’s view that the city is undersupplied in terms of stock as a key selling point for the Kilkenny Inn. The Irish Times, 12th January

Smithfield, Dublin 7 The Dublin Loft Company is looking for a buyer for the Hendrick Smithfield. The boutique Dublin 7 hotel is being offered to the market by agent JLL at a guide price of €35m. Although that figure is understood to be roughly equivalent to the sum the company secured from MM Capital and Roundshield for the 163-bedroom Big Tree Hotel, the amount being sought for the 147-bedroom Hendrick is higher on a per key basis. The €238k per key being guided for the Smithfield hotel is €24k more than the estimated €214k per key the Dublin Loft Company is understood to have agreed to in the Big Tree transaction. While both hotels are newly built, LEED gold-certified for sustainability, and situated within walking distance of Dublin’s city centre, the Hendrick’s slightly higher valuation is likely accounted for by the fact that it comes for sale with an established trading history under a management agreement with the Tifco Hotel Group. The Irish Times, 12th January

For lending terms on this asset please contact rossmetcalfe@origincapital.ie

Youghal, East Cork Aherne’s of Youghal, run by three generations of the Fitzgibbon family, has been put up for sale by agent Dominic Daly guiding €2m. The family is seeking to retire from the day-to-day running of the substantial business. The property has a C2 BER, an adjacent site with parking, glasshouse, and herb beds, and has scope to add c. 10 further bedrooms. The restaurant and townhouse luxury accommodation business with 14 large en suite bedrooms plus owners’ apartment is part of Ireland’s elite Blue Book network of country houses, manors, and top restaurants. The business has continued to trade well throughout the Covid-19 crisis. Annual recent turnover has been averaging €1.4m pa, trading typically over a five-day week. The property has an outdoor dining area capable of hosting 80 for special events, as well as having a 60-seat formal restaurant, 28-seat cocktail bar, 48-seat restaurant, 16-seat resident’s breakfast room, and residents’ drawing room with antique fireplace. The Irish Examiner, 13th January

Clonmel Park Hotel, Co Tipperary Talbot Hotels has acquired the four-star Clonmel Park Hotel in an off-market transaction for a price of c. €7.5m. The sale marks the latest hotel divestment by Tetrarch Capital. The Co Tipperary hotel, which was built in 2006, has 99 bedrooms, extensive conference and banqueting facilities, a leisure centre, restaurant and bar. The three-storey property extends to c. 71,634 sq. ft. and has benefited from significant refurbishment. Investment group Tetrarch Capital bought the hotel in 2015. The acquisition brings the Irish-owned Talbot Hotel Group into Tipperary for the first time. The group already owns six hotels across Wexford, Carlow, Cork and Dublin, including the well-known Talbot Hotel in Stillorgan, Dublin; the Talbot Hotel Wexford; and the Oriel House Hotel in Ballincollig, Co Cork. The Clonmel Park will be renamed as the Talbot Hotel Clonmel. The Irish Times, 13th January

Bride Street, Dublin 8 An Bord Pleanála has given the green light to plans for a 247-bedroom, nine-storey CitizenM hotel at Bride Street, Dublin 8. The scheme involves demolition of the existing five-storey Molyneux House. Despite appeals, the board granted permission after concluding that the scheme would not seriously injure residential or visual amenities of the area or of properties in the vicinity. The hotel will be CitizenM’s first foray into the Irish market. An economic impact assessment lodged with the scheme by EY states that with the pipeline of Dublin hotel room supply forecasted to decline by 56% this year due to Covid-19, “CitizenM will therefore be a timely development”. The EY report states that the development would contribute €21m to the Dublin economy pa when operational. Plans were first lodged for the scheme in June 2020 and the council granted permission in January 2021. The Irish Times, 17th January



Walkinstown, South West Dublin The sale of a ‘shovel-ready’ residential site in south Dublin is expected to see strong interest from developers and investors involved in the city’s private rented sector market. The site, known as Walkinstown House, comprising a 2.3 acre brownfield plot, comes with full planning permission for a 163-unit apartment scheme along with residential amenities that include a gym, meeting rooms and lounges. The approved development also provides for the construction of a café and creche and 56 car parking spaces. The site is being offered for sale through agent Cushman & Wakefield at a guide price of €9m. The extant planning permission comprises a mixture of apartments, including one studio unit, 59 one-bed apartments, 96 two-beds and seven three-beds. The scheme’s 56 car parking spaces will be located at podium level, providing the purchaser with a significant cost saving compared to underground car parking. The Irish Times, 12th January

Ballsbridge, Dublin 4 The former St Mary’s Church, at the corner of Anglesea Road and Simmonscourt Road, is expected to attract strong interest when it goes to tender on February 23rd next. The listed property has potential for redevelopment as residential, commercial, or cultural space. The freehold property, on a site of one acre, is guiding at a price of €3.75m, and is being brought to the market by Lisney. It is being sold by the Representative Church Body, the property arm of the Church of Ireland. As a listed property, planning permission is unlikely to be obtained for demolition of the church, and any potential development must have regard for the protection and conservation of the church structure and its historical features. Redevelopments of such properties in recent years have included the former St Mary’s Church, on the junction of Mary Street and Henry Street in Dublin’s city centre, into a bar and restaurant, and a 17th century Huguenot Church, St Luke’s, on Newmarket Square, Dublin 8, into a three-storey modern office. The subject property extends to c. 5,200 sq. ft. of gross internal area. It is zoned Objective Z8 “Georgian Conservation Area” under the Draft Dublin City Development Plan 2022-2028. The Irish Times, 12th January

Beaumont, North Dublin The property arm of Urban Life has secured planning permission for a build-to-rent apartment scheme for Beaumont in north Dublin. An Bord Pleanála overturned Dublin City Council’s (DCC) refusal of permission for the scheme. The project attracted strong local opposition, with 165 parties lodging objections against the scheme. Urban Life (BMD) Ltd initially proposed a 99-unit, two-block apartment scheme, with one block reaching to eight storeys. DCC concluded the height, scale and massing of the scheme was excessive and would significantly detract from the visual amenities of the area. However, the appeals board concluded the scheme “would constitute an acceptable density of development in this accessible urban location, would not seriously injure the residential or visual amenities of the area or of property in the vicinity”. An Bord Pleanála said it was reducing the eight-storey height to six storeys in the interests of visual and residential amenity, traffic and pedestrian safety. The Irish Times, 13th January

Balgriffin, North Dublin Residents at Parkside, Balgriffin, in north Dublin feel “shock” and “betrayal” over plans by Cairn Homes to construct a 730-unit apartment scheme for the area. The new apartment block scheme would reach to nine storeys and is the fifth phase of the Parkside development. Consultants for Cairn Homes have told An Bord Pleanála that to date, of the 846 permitted units, 534 have been sold and occupied. The new scheme is comprised of three studios, 315 one-bed apartments, 376 two-bedroom apartments and 36 three-bedroom apartments across five apartment blocks and two duplex blocks. According to the residents, “the proposed development in terms of density and building heights represents an overdevelopment relative to existing and adjacent development”. Advancing the case for the scheme, planning consultants for Cairn, McGill Planning, said the nine-storey element “is proposed as a local pop-up height to mark this local node at the public plaza and help create a sense of place and legibility to the plaza framing the start of the Greenway”. A decision is due on the scheme in March. The Irish Times, 14th January

Residential Zoned Land Tax, Ireland Property owners whose land is zoned for residential use will be able to appeal its inclusion on maps to An Bord Pleanála. Landowners can also appeal to the board for a second time after additional maps are released by local authorities in May 2023 identifying land that would be subject to the new tax. The Residential Zoned Land Tax (RZLT) will come into force on January 1, 2024 and be set at 3% annually for the market value for land zoned for housing that is not being developed, regardless of its size. All property owners whose land was zoned for residential use on or before January 1, 2022 are liable to be taxed under RZLT from January 1, 2024. Councils have been told to publish draft maps by November with submissions and appeals from landowners to follow, by January 2023. Landowners can then appeal a decision made by a local authority to include lands on these maps to An Bord Pleanála with a decision due after 16 weeks. A meeting in October between Paschal Donohoe, the Minister for Finance, and Darragh O’Brien, the Minister for Housing, heard that data from these maps will be key to the success of the new tax, providing a basis in determining land that is zoned for residential and serviced and therefore taxable. Officials also indicated there would be a loss in revenue as a result of the winding down of the Vacant Site Levy. Department of Housing officials indicated that between 19,700 and 24,700 acres of land would fall within the scope of the new tax. The Business Post, 13th January

Strategic Housing Development, Ireland Dozens of developers rushed to lodge last-minute planning applications before the controversial fast-track housing process expired at the end of last year. On December 17, the state began to phase out the SHD rules in favour of the new Large-Scale Residential Development (LSRD) system. The new LSRD process retains most elements of the SHD system but requires developers to first seek planning permission for large housing developments from local authorities. New data released by An Bord Pleanála has shown that developers lodged double the number of plans with the planning board in 2021 than in 2020 in a bid to get their projects into the system. Between October and December 2021, a total of 65 pre-applications were made to An Bord Pleanála, compared to 33 in the same three-month period of 2020. Developers who successfully lodged last-minute applications by December 17 will now be allowed to proceed into the SHD system if their proposal is approved after a nine-week deliberation process. The Business Post, 16th January

Three-Bed Apartments Feasibility According to a report by Savills, three-bed apartments can only be built in south Dublin at affordable rates for families with a household income of €157k+. As part of the latest draft of its development plan, Dun Laoghaire-Rathdown County Council has outlined that it will mandate developers to ensure three-bed units make up at least 40% of new apartment blocks. In submissions to the local authority, large residential developers including Quintain Ireland, Cairn Homes and Glenveagh Properties have criticised the proposal. A report submitted to the council by Quintain, drafted by Savills, said it was not possible to deliver affordable three-bed apartments for families and larger households. It said such units would most likely demand a market rent of at least €2.7k. Savills also said anecdotal evidence from its property management department suggested there was much larger demand for one and two-bed apartments, and little demand for apartments among family households. Glenveagh Properties said the new measures for three-bed apartments would not be workable if brought in. The latest data from the CSO shows households in Dun Laoghaire-Rathdown had the highest median income in the country at €66,203. The Business Post, 16th January



Capital Gains Tax (CGT) Exemption, Ireland The CGT exemption, an incentive introduced during the financial crisis, allowed investors buying commercial or residential property to avoid taxes on any gains at the rate of 33%, provided that they held the property for seven years (later reduced to four). The incentive ran until 2014, and figures from Revenue, released for 2018 and 2019, show that the cost to the exchequer for these years was c. €300m, as investors avoided tax on gains of c. €1bn. With figures yet to be disclosed for the remaining two years, 2020 and 2021, it’s likely that the total tax savings will exceed €500m. The scheme is likely to be one of the reasons why so many smaller landlords have departed the residential property market in recent years, as an eligible property would have had to be sold by year-end 2021 to qualify for the relief. Latest figures from the Residential Tenancies Board show that c. 46 landlords left the market each week in the autumn, or c. 2,000 on an annual basis. The total amount of gains claimed by taxpayers in 2018 and 2019 was €879m, and the amount of tax which was avoided was €290m (i.e. at a rate of 33%). On average, the tax saving per claim/taxpayer in 2019 was €198.876k. The figures also show that residential properties accounted for 60% of all claims in 2019, followed by commercial (20%), other (14.5%); agricultural land/buildings (3.5%) and development land (2%). However, the greatest tax savings were those made by commercial investors. Figures for 2019 show that the 140 commercial property investors claiming the relief made gains of c. €245.8m on property acquired during the years 2011-2014. And by avoiding CGT, they managed to save c. €81.1m in taxes. Residential investors, on the other hand, made gains of c. €88.4m on property they acquired during the relevant time period, leading to tax savings of c. €29.2m that year. The Irish Times, 12th January

CBRE Outlook 2022 Report The ongoing emergence of society from the Covid-19 pandemic should mean another strong year for the commercial property market, according to CBRE. The growth in demand for alternative investments such as data centres, life sciences and senior housing is expected to see the momentum built up in the last 12 months continue. Speaking at the virtual launch of the 33rd edition of the agency’s annual Outlook report, managing director Myles Clarke said: “The landscape for CRE is dramatically different from the last decade, yet long-term financial trends and the growth trajectory of the Irish economy remains intact. This presents immense opportunity”.

The focus on sustainability will become apparent this year in the office sector with a greater divergence in performance and pricing between prime and secondary buildings. This “flight to quality” will mean occupiers and investors favouring new and more sustainable buildings. With c. 2.85m sq. ft. of space taken up in Dublin, the industrial and logistics sector is on course for another strong performance this year. However, with rising build costs and site value inflation expected means rents could surpass c. €11 per sq. ft. in the Dublin market before year-end.

The recovery of the retail market could be tempered somewhat by supply chain disruptions and inflationary pressures that cause problems for retailers and consumers. With no immediate or obvious solution to the housing crisis in sight, the report says institutional investors will continue to seek out opportunities to develop accommodation for the private rented sector (PRS) market in Dublin.

Looking at the prospects for the development land market, the report’s authors say they expect to see strong competition this year for well-located sites, particularly those that have existing planning permission and access to supporting infrastructure. Having recorded 18 sales with a combined value of €383m in 2021, the ongoing recovery in trading performance and the emergence of new investors is expected to see the sale of several hotel portfolios this year. Following one of its most active years on record, with €600m invested in various assets, the healthcare sector is in line for a considerable increase in development activity in 2022. The Irish Times, 18th January

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