18th July (Issue 406)

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

Carlow, Co Carlow Just under five years on from its acquisition by Friends First for €16.75m, Carlow Retail Park has been sold in an off-market transaction to a private Irish investor for €15.4m (NIY 7.5%). Aviva had assumed ownership of the development on foot of its acquisition of Friends First in 2018. Located on Hanover Road and approx. 500 metres from Carlow town centre, Carlow Retail Park comprises nine warehouse units with a combined footprint of 100,000 sq. ft along with 600 car-parking spaces. Developed originally in 2003, the scheme is anchored by DIY giant Woodie’s along with seven other tenants, namely Harry Corry, Halfords, Homestore, Pet Mania, Electro City, Right Price Tiles and KFC. The letting of the ninth and final unit – unit 6 (7,642 sq. ft) is understood to be the subject of advanced negotiations with a prospective occupier at present. The anchor tenant, Woodie’s, pays a rent of €577.5k for a store extending to 37,000 sq. ft and a garden centre with a further 22,000 sq. ft. The scheme is understood to be generating a total annual rental income of €1.25m. The Irish Times, 12^th July

MIXED USE

Vantage Business Park, Dublin 11 A consortium of South African private investors has paid approx. €13m (NIY 5%) for Unit 2 at Vantage Business Park in Dublin. The property comprises a 67,146 sq. ft detached industrial/warehouse and office building. The property, built in 2020, includes 10,092 sq. ft of office accommodation over two storeys together with 68 car-parking spaces. Unit 2 Vantage Business Park will provide its new owners with an immediate income stream of €720k pa based on a new 20-year FRI lease to NPP, incorporating five-yearly rent reviews. The tenant has the benefit of a 10-year break option. The Irish Times, 12^th July

Docklands, Dublin Staff at Google will have to wait at least another year before moving into the company’s landmark triplet towers in the Dublin docklands. According to market sources, the company will not move to its €300m Bolands Mills development until mid to late 2024. The company bought the development from Nama in 2018 for a reported €170m. The scheme comprises three striking towers and various restored listed buildings. It will have approx. 301,390 sq. ft of offices, 46 apartments, and retail and restaurant units. There were delays in the construction process when remediation works had to be carried out on the buildings in 2019. The development was originally intended to house up to 2,500 workers, but in 2020 Google applied for planning permission to reduce the amount of office space and to increase the amount of restaurant and retail space. The Sunday Times, 16th July

OFFICE

Merrion Road, Dublin 4 Pan-European investor and asset manager M7 Real Estate has achieved 100% occupancy at the Nutley Building in the Merrion Centre on Merrion Road, Dublin 4. St Vincent’s Hospital has signed a new 10-year lease on 4,160 sq. ft of space. The fund portfolio is now 97% let while its WAULT has been extended to over four years. The rental income across M7′s suburban Dublin office portfolio, meanwhile, has been increased by approx. 12%. The Irish Times, 12^th July

INDUSTRIAL/LOGISTICS

Dublin Airport Logistics Park, Dublin Holland & Barrett has sublet Unit 5 Dublin Airport Logistics Park to DHL Global Forwarding (Ireland) Limited. Savills brokered the deal which will see DHL take a sub-lease from June 2023 until January 2032 at an annual rent equating to €10.75 per sq. ft incorporating a three-month rent-free period. With a gross external floor area of 65,369 sq. ft, including 8,654 sq. ft of offices, the detached logistics facility was built by Rohan Holdings in 2017. According to a report at the time, Holland was paying €9.44 per sq. ft pa for the premises that year. That indicates a 13.9% increase since 2017 levels. The Irish Independent, 13^th July

Ballycoolin, Dublin 15 Harvey is quoting a rent of €800k pa for Unit 200 at Northwest Business Park in Ballycoolin, Dublin 15. The subject property comprises two separate warehouse and office buildings extending to a total area of 70,267 sq. ft on a 5.34-acre site, representing a site density of just 30% within a prime distribution location. Building 1 extends to 58,329 sq. ft and has extensive profile to Mitchelstown Road. Building 2 makes up the remainder of the total size. The Irish Times, 12^th July

CBRE Report In Q2 2023, the take-up of industrial and logistics space in Dublin was 652,852 sq. ft, representing a nearly 30% decline from the previous quarter and 25% below the 10-year quarterly average. The total take-up for H1 2023 reached 1,572,962 sq. ft, similar to the same period in 2022. The vacancy rate at the top 36 industrial and logistics parks in Dublin was 1.4% at the end of Q2. Prime rents rose by over 4% to €12.50 per sq. ft. The investment activity amounted to just under €50m, accounting for 15% of the overall Irish investment spend. The South West (N7) Dublin road corridor accounted for 43% of the total take-up in Q2. Build-to-suit and pre-let agreements comprised 32% of the deals. New buildings reached practical completion, and approx. 1,237,849 sq. ft of new stock were under construction. Prime Dublin rents increased by 11% over the past 12 months. The investment yields remained unchanged at 4.75% for prime assets and 6.00% for secondary assets in Q2. In summary, the Q2 2023 figures for Dublin’s industrial and logistics market show a decline in take-up, low vacancy rates, rising prime rents, and steady investment activity. CBRE Dublin Industrial & Logistics Q2 2023, 17^th July

HOSPITALITY

Kenmare, Co Kerry Hoteliers Francis Brennan and John Brennan are this week considering offers for their two Kenmare Co Kerry hotels in the €25.3m ‘Project Halo’ sale, via agents CBRE. The duo put the 46-bed Park Hotel Kenmare and the 28-bed Lansdowne Hotel on the market in May with a combined €20.5m price guide. Interest has been shown in the two together, and in lots, it’s understood: The Park being the more valuable at €17m, and the more recently acquired Lansdowne was guided at €3.5m, bought out of receivership in 2020. The Irish Examiner, 13^th July

Irish Hotel Market Report The Irish hotel sector is undergoing a strong recovery following the challenges posed by the COVID-19 pandemic. The outlook for the sector is positive due to several factors. The Irish economy is growing rapidly, with low unemployment and solid wage growth, providing support for domestic leisure spending. Households in Ireland have accumulated over €150bn in savings, which accounts for approx. 30% of Irish GDP, further bolstering consumer spending and leisure demand. Inbound traveller numbers are approaching pre-pandemic levels, and forecasts indicate an average annual growth of 11% in visitor numbers until 2025. Occupancy rates and room rates have largely returned to pre-pandemic levels, with Dublin catching up to regional markets. Despite the recovery, challenges remain, including energy costs, staffing issues, VAT rate changes, and repurposed hotel properties. Construction and financial costs limit further development, although the improved trading environment should help absorb new capacity, especially in Dublin. The hotel market has seen positive transactional activity in 2023, with approx. €130m transacted across nine deals, along with ongoing sale agreements for hotels and sites. Cushman & Wakefield Report, 13^th July

RESIDENTIAL / DEVELOPMENT

Project Tosaigh The LDA is preparing to pay private residential developers more than €2bn to build 5,000 homes. The agency will go to tender as it gathers a panel of ten or more developers to build the homes under the government’s Project Tosaigh initiative. The LDA published a prior information notice earlier this month, informing developers that it would publish the tender on July 24. According to the notice, the agency will forward fund residential schemes — comprising apartments and houses — by buying land from developers or landowners and then making staged payments during the construction process. It will also look to team up with developers in a joint venture or partnering arrangement. The agency has said it expects to build 5,000 homes over four years. It will focus on cost-rental homes but will also provide affordable housing for purchase. The developments will be located in Dublin and its surrounding counties, and in Cork, Galway, Limerick and Waterford. The Sunday Times, 16^th July

The National Asset Management Agency (Nama) gave a 97.5% discount when selling loans related to a portfolio of residential units to a relative of the borrowers, because it believed it would never be able to dispose of the land due to a campaign of intimidation. Nama booked a loss of approx. €6m on loans – backed by collateral on 14 occupied rental homes, 28 unfinished units and seven plots of land – in an “exceptional” case that has been highlighted in a new report from the Comptroller and Auditor General (C&AG). The C&AG’s report said Nama had in 2021 sold loans related to two companies – which had a face value of €10.46m – for €265k to a newly incorporated company that was funded by a family relative of the debtors involved in the case. Nama had previously acquired the loans for €4.37m – a 49% discount on the initial price of €8.58m – so it did not lose out on a full €10m. But because €1.9m in unpaid interest was added to the loans, it did ultimately lose approx. €6m. The reason for the major discount, the report shows, was that Nama believed it would be unable to sell the assets involved – which it valued at €1.3m – because of “threats and intimidation”. The Business Post, 12^th July

Planning Permissions A recent Department of Finance study reveals that at the end of last year, there were over 100k dormant or non-activated planning permissions for homes in Ireland, with more than 50k of them concentrated in Dublin. This represents a significant increase from the estimated 70k-80k non-activated permissions at the time the government announced its Housing for All strategy in late 2021. In Dublin alone, approx. 50,776 uncommenced units were identified, with a staggering 90% of them planned as apartments. The report highlights that these uncommenced units were primarily located on sites owned by a relatively small number of developers. The study further breaks down the data for Dublin, indicating that there were 108 sites with planning permission for high-density developments of 100 units or more. Out of these, 31 sites were subject to ongoing judicial reviews, two had their permission quashed, and four were related to sites where the judicial review had either been withdrawn or the planning decision upheld. Moreover, the report identifies 75 actionable sites in Dublin, with permissions in place to build a total of 23,526 units. Additionally, it reveals that 44 of these sites have had no activity for up to two years since obtaining planning permission, 22 sites have been dormant for two to four years, and nine sites have remained inactive for over four years. The Irish Times, 13^th July

Donnybrook, Dublin 4 An Bord Pleanála has granted planning permission to Cairn Homes for a €345m, 608-unit apartment scheme on former RTÉ lands at Donnybrook in Dublin 4. However, in a split decision the appeals board has refused permission for the 16-storey tower component of the scheme that was to include a 192-bedroom hotel and 80 apartments. The scheme is to be built across the remaining nine blocks ranging from two to 10 storeys in height. The original scheme comprised 416 built-to-rent apartments and 272 build-to-sell units. The grant of the 10-year planning permission comes six years after Cairn Homes purchased the lands from RTÉ for €107.5m in 2017. The application made under the Large Scale Residential Development (LRD) scheme was Cairn Homes’s second attempt to build on the lands. The Irish Times, 13^th July

Balbriggan, North Co Dublin Plans have been lodged for a €251.5m 564-unit residential scheme for a site off Flemington Lane near Balbriggan in North Co Dublin. In the Large Scale Residential Development (LRD) scheme application lodged with Fingal County Council, Dean Swift Property Holdings is seeking a 10-year planning permission for 378 houses, 102 apartments and 84 duplex units. The proposal also includes the provision of nine commercial units and six communal units and the 56-acre greenfield site 2.4km from Balbriggan town centre is currently used for agriculture including crop-growing. As part of its Part V social housing obligations, the firm has put an indicative price tag of €50m on 114 units to be sold to Fingal County Council for social housing. The units will have an average indicative price tag of €439k and a final price will be agreed if and when planning permission is secured. A decision is due on the application in September. The Irish Times, 17^th July

If you have an article which you would like to have considered for inclusion in our next weekly report, please contact us at info@origincapital.ie

Origin Capital funds senior debt transactions in the CRE investment sector, typically in excess of €3m, and has lent over €200m to clients since April 2015.

11th July (Issue 405)

25th July (Issue 407)