19th December (Issue 127)
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.
Happy Christmas from the team at Origin Capital and we look forward to working with you in 2018.
RETAIL
Tesco Ireland: Tesco Ireland will invest a total of €70m in its stores between 2017 and 2018, with €31m earmarked for a new retail centre in Liffey Valley. The retail centre, which opens in May 2018, will employ 150 people and comprise a 60,000 sq. ft. Tesco store with five-ground floor retail units, a first-floor café and a number of kiosk units. The retail giant opened its first new store in four years in Swords last May and is planning further expansion, particularly in its grocery home shopping business, which is seeing substantial growth. The Irish Independent, 18th December
80 Grafton Street: Irish Life is close to completing the acquisition of its 19th retail property on Grafton Street, with the purchase of the Molton Brown store for in excess of its €9m guide price. The sale shows an initial yield of only 2.81% however this is expected to rise with the next rent review in October 2019, as the current rent of €275k p.a. is perceived to be well-below market rent. The Molton Brown store is located at 80 Grafton Street and has a retail trading area of 925 sq. ft. and the building has an overall floor area of 4,250 sq. ft. over five floors. Molton Brown occupy the property under a 15-year lease which still has c. 12 years to expiry. The Irish Times, 13th December
OFFICE
Chancery Building: Hibernia REIT has sold the Chancery Building in Dublin 8 to an unnamed buyer for €23.8m, after paying €16m to acquire the property via a secured loan purchase three years ago. Hibernia have undertaken an extensive asset management strategy since acquiring the property, increasing the weighted average unexpired lease term of the property from two years to eight years. The sales price also reflects a tighter yield of 5.9% when compared to its yield three years ago of 6.8%. The current tenants include the Office of Public Works and Wella. The Irish Independent, 19th December
Standard & Poors (S&P) Dublin Office: The ratings agency S&P Global Ratings has chosen Dublin as its European base for its post-Brexit hub, with its new offices set to open by December 2018. The new entity was registered three months ago under S&P Global Ratings Europe (S&PGRE), and the new office will see a number of positions created at managerial, analytical and support level. The Irish Times, 14th December
Eli Lilly Office: Eli Lilly are set to further expand their presence in Cork, after it was announced that the O’ Flynn Group are to build a €20m, 70,000 sq. ft. office block for the firm adjacent to their existing Cork office in Eastgate Business Park, Little Island. The new block, Island Hall, will facilitate up to 500 staff, and will bring their total office footprint in the business park up to 135,000 sq. ft. Eli Lilly have been in Ireland since 1976, and have been manufacturing in Kinsale since 1981, where a new €200m biopharma plant is being constructed. The Irish Examiner, 14th December
HOTEL
Lone Star Portfolio: Lone Star has sold a portfolio of 37 European hotels to a bid led by the Swedish hotel group Pandox for £800m. The portfolio consists of the entire Jurys Inn portfolio as well as one Hilton Garden Inn at London’s Heathrow Airport. The transaction sees Pandox retain ownership of 20 hotels in the portfolio, as well as the operations of the Hilton Garden Inn. Its bid partner Fattal Hotels Group will acquire the remaining properties in the transaction. The portfolio included three Irish hotels: Jurys Inn Galway, Cork and Dublin. The Irish Times, 13th December
Dalata Expansion: As part of their latest trading update, Dalata Hotel Group has announced that it will open 1,281 rooms in Ireland and the UK in 2018. The group also project that earnings for 2017 will be in line with market expectations, with Davy forecasting earnings of €102.5m, which reflects growth of 20% YoY. Recent transactions undertaken by Dalata include the signing of a 35-year lease for a 250-room Maldron Hotel in Glasgow and the purchase of 62 bedrooms in the Clayton Hotel Cardiff Lane, in Dublin, for €8.7m. Dalata now owns 252 of the 304 bedrooms in the Clayton Hotel Cardiff Lane. The Irish Independent, 19th December
Donnybrook Hotel: Kouchin Holding, controlled by Emmet O’ Neill, has sought planning permission to develop a 78-bedroom hotel in Donnybrook, Dublin 4. The site is located alongside the fire station in Donnybrook village, and the application seeks permission to demolish the existing single-storey structures at 25 – 27 Donnybrook Road and 1 – 3 The Crescent to facilitate the development. The Irish Times, 15th December
RESIDENTIAL / LAND
North Bank Portfolio: Kennedy Wilson has paid c. €45m to acquire a portfolio of 124 apartments, a ground floor commercial unit and 85 car spaces at North Bank in the north Dublin Docklands. The property is in a prime location, c. 200m from the Central Bank’s new HQ. According to the selling agent Hooke & MacDonald, the estimated cumulative income from the property when fully let is c. €2.63m p.a., offering Kennedy Wilson a gross yield of 5.6%. The Irish Independent, 16th December
Glenveagh Docklands Site: Glenveagh Properties has signed a deal to purchase a c. five-acre site in Dublin’s north Docklands which is expected to accommodate more than 450 residential units. The site is expected to cost c. €40m and the transaction is expected to close before the end of the year. The site is located in close proximity to the IFSC and the “Silicon Docks” area, along the East Wall Road. Glenveagh raised over €500m in an IPO when it listed on the Irish Stock Exchange earlier this year and has broken ground on five sites so far in 2017, with construction expected to begin on two additional sites in early 2018. The Irish Times, 14th December
Fernhill Golf Course: The launching of the sale of the Fernhill Golf Course and Hotel near Carrigaline in Cork by Cushman & Wakefield will be seen as a substantial residential development opportunity by developers. The 78-acre site which is being sold with vacant possession, has a €12m guide price which could increase to €20m once planning permission is in place. The site has Strategic Land Reserve (SLR) status, and according to the sales agent, has good prospects of planning and development within five years. The Irish Examiner, 14th December
16-Storey Clongriffin Development: A landmark 16-storey apartment development is to proceed in Clongriffin in north Dublin following the recent granting of planning permission. An Bord Pleanála has granted Gannon Homes permission to develop 139 units in a managed complex to include a concierge service, gym, residents lounge and extensive new roof gardens. Located between the Malahide Road and Baldoyle, Clongriffin has been designed as a new town and is expected to contain c. 3,600 homes once complete, with half of them having already been developed. The Irish Times, 13th December
Liam Cosgrave House: The potential sale of the home of the recently deceased former Taoiseach Liam Cosgrave is attracting interest from a number of the country’s biggest homebuilders. The bungalow on Scholarstown Road in Templeogue, south Dublin, sits on 16 acres of prime development land, which is zoned residential and is serviced. No agent has yet been appointed and should the sale go ahead the value is expected at close to €20m. The Sunday Times, 17th December
Grafton Street Apartments: Johnny Ronan’s Ronan Group Real Estate (RGRE) has agreed to lease three upper floors of the Permanent TSB building on the corner of Grafton Street and Harry Street in Dublin 2 to City Break Apartments. The lease, which is for a 35-year term, sets the initial rent at €150k p.a., although there are rent reviews every five years. The three upper floors of the property are to be converted into 16 apartments, and should be available by March 2018. The Irish Times, 13th December
Residential Planning Permission: The latest figures from the CSO on planning permissions show that permission was granted for 2,694 apartments in the first nine months of 2017, a decrease of 4.1% YoY. The number of planning permissions granted for housing was more positive, with permission being granted for 11,148 units, an increase of 20.7% YoY. Central Statistics Office, 14th December
Apartment Developments: The Department of Housing are set to announce a number of amendments to existing planning guidelines, with the aim of making the development of high-rise developments more attractive to developers. The new measures, which will be announced by the Minister for Housing Eoghan Murphy, will include (i) the removal of height restrictions, instead using suitability as a principle (ii) increasing the number of units on each floor for every lift or staircase from eight to 12 and (iii) removing the requirement to have car-parking spaces. The Irish Times, 18th December
Central Bank Report: A new report by the Central Bank shows that there were 75,000 mortgages (9.6% of all mortgages) in negative equity in Q3 2017, a significant improvement from the 320,000 mortgages (39.1% of all mortgages) in negative equity in Q4 2012. While the figures represent a marked decrease, they are still high when based on international standards. The figures show that there were 8.7% of family home mortgages in negative equity in Q3 2017, down from a peak of 36%, while buy-to-let mortgages are now 15.6%, having been as high as 54%. The Irish Times, 18th December
Home Repossessions: The Q3 2017 report by the Central Bank on home repossessions and arrears shows that there were 420 owner-occupier homes repossessed by lenders in the quarter, 80 more than the 340 repossessed in Q2 2017. Despite the increase, the figures show that 12,295 properties have been repossessed by lenders since 2010, which equates to c. 1.4% of the mortgage stock. The relatively low repossession rate is believed to reflect the legal impediments faced by lenders and the length of time involved in securing an order for repossession. The Irish Times, 14th December
OTHER
Trinity Street Car Park: The property developer Gerry Conlon has completed the purchase of the Trinity Street car park off Dame Street in Dublin’s south inner city for in excess of €18m. The car park, which includes three ground-floor retail units and four self-contained office units, was offered for sale by CBRE with a guide price in excess of €17.3m. The asset is let under a single 35-year lease which is due to expire in 2029. Of the current rent of €920k p.a., €636k is from the car park and €284k is from the retail and office units. The property will show an initial yield of c. 4.5%. The Irish Times, 13th December
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