23rd January (Issue 130)
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.
LOAN / PORTFOLIO SALES
European Loan Sales Activity: Investment advisory group Evercore has published a review of European loan sales activity in 2017, which found that it was again a record year, with €100bn of par value loan sales completed. The report found that 2017 was dominated by Southern European loan sales and that Ireland and the UK are now seen as peripheral territories with relatively modest activity. Evercore lists two Irish loan portfolios as live sales; AIB’s €3.75bn par value Project Redwood and NAMA’s €150m par value Project Lee. Project Redwood is currently in opening bids stage and expected to sell in H1 2018 for c. €2bn. Project Lee is a portfolio of loans linked to the late Cork developer Owen O’Callaghan, which is expected to be the next sale although not currently on the market. NAMA Wine Lake, 21st January
OFFICE
Cherrywood Business Park: Hines has sold eight office blocks at Cherrywood Business Park in South Dublin to Spear Street Capital, a San Francisco investment company, for c. €145m in an off-market deal. Hines will reportedly use the proceeds of the sale to offset part of the cost of developing the town centre element of the wider Cherrywood scheme. Subject to planning permission, construction of Cherrywood Town Centre is to commence in the coming months, with the first apartment blocks expected to be completed by mid-2020. The total cost of the apartments and street level shops and cafés is estimated at c. €450m. Hines purchased 412 acres in Cherrywood in 2014 in partnership with the American fund King Street Capital, for €270m. The Irish Independent, 18th January
Communications House: A private Asian investor has purchased Communications House on Barrow Street in Dublin 4 for just over €7m. The three-storey building extends to 9,600 sq. ft. and produces a rental income of €420k p.a., resulting in a net initial yield of 5.5% and a capital value of €730 psf. The building is let to Imagine Telecommunications on a 25-year lease from 1999 but is not currently occupied. Imagine Telecommunications also rent 17 basement car spaces. The Irish Times, 16th January
Dublin Office Space: Figures from Cushman & Wakefield show that half of overall office space taken up in Dublin last year was in the central business district (CBD). Cushman noted that a 16% increase in the volume of space taken in the CBD meant it represented half of Dublin’s overall take-up in the year, one third of which was newly delivered stock. Activity in 2017 was driven by an increase in very large lettings, with five deals in excess of 107,000 sq. ft., compared to no such transaction in 2016. Microsoft was the largest take-up of the year, moving into their new 372,000 sq. ft. office in Sandyford in Q4. Cushman forecasts the delivery of over two million sq. ft. of office space in 2018, with c. 37% already pre-let. The vacancy rate in Dublin currently stands at 8.7%. The Irish Times, 18th January
RETAIL
Dublin Restaurants: The Sunday Business Post reports on the Dublin restaurant sector, and examines the possibility that the market may be oversupplied. The report cites figures from the Revenue Commissioners on special restaurant licences and wine retailers on-licences, where the combined number of licences issued has risen from 718 in 2012 to 1,017 in 2017. In addition, it is estimated that the number of new restaurant seats in Dublin in 2017 was c. 6,000. The Sunday Business Post, 21st January
HOTEL
Carmelite Seminary: Joe and Margaret Scally of the Hayfield Manor Hotel in Cork have completed the purchase of the former St. Mary’s Carmelite seminary on Bloomfield Avenue in Dublin 4 for c. €16m, €6m above guide price. The deal represents a first foray into the Dublin hotel market for the Scally’s, who also operate the Killarney Royal Hotel and Great Southern Hotel in Killarney, Co. Kerry. The building, which dates back to 1875, extends to 35,000 sq. ft. on a 3.09-acre site and includes a chapel on one wing. A feasibility study by John McLaughlin Architects advised interested parties of the potential for more than 113,000 sq. ft. of developments on the site to include 90 apartments and 10 large houses, however the property is likely to end up in hotel use given the current shortage of rooms in the city, and the experience of the promoters. The Irish Times, 17th January
Liberties Regeneration: An Bord Pleanála has granted planning permission for a major regeneration scheme on Francis Street in the heart of Dublin’s Liberties. The scheme, which was designed by Douglas Wallace Architects, will include a 260-bedroom aparthotel, restaurant units, a gym and a cultural theatre and performance arts venue. The €25m project will have an overall floor area of 107,000 sq. ft. and will be promoted by Anthony Byrne, founder of the Tivoli Theatre. The Irish Times, 17th January
Residence / Restaurant 41: The Residence and Restaurant 41 at 41 St Stephen’s Green in Dublin city centre are to remain closed for the next few months, to allow their new owners, Press Up Entertainment Group, to complete a substantial refurbishment to the property. Upon completion, the property will include an “all-inclusive” bar and restaurant and will re-open under a new name. The property is expected to re-open in the spring. The Irish Times, 18th January
RESIDENTIAL / LAND
Local Authority Mortgages: The Government has set aside €200m as part of a new scheme whereby local authority mortgages will fund first-time buyers of not just new builds, but also second hand homes and self-builds. To qualify for the scheme, applicants must (i) either have an individual income of no more than €50k or joint income of no more than €75k (ii) have been unable to secure sufficient funding from two financial institutions and (iii) be seeking to acquire a property worth no more than €320k in the Greater Dublin Area, Cork and Galway or €250k in the rest of the country. The key attraction of the scheme is that the local authority mortgages will carry a fixed-rate of between 2% and 2.25% over a 25 – 30 year term, which is well below the interest rates offered by the banks at present. The Irish Times, 22nd January
Ballymore Malahide: The Sean Mulryan property group Ballymore has paid €15.1m for two sites in Malahide, North Co. Dublin. The group intends to develop high-end housing on the sites on Seamount Road, close to Malahide Village. The sites currently have planning permission for 46 detached houses with potential to increase this to 60. Cushman & Wakefield sold the sites and estimated that houses with an average floor space of 1,930 sq. ft. would sell for between €750k and €1m. Ballymore recently exited NAMA after repaying c. €3bn and is working on multiple projects in the UK and Ireland. The Sunday Times, 21st January
Hollystown Golf Club: Glenveagh Properties has agreed to buy the 27-hole Hollystown Golf Club and surrounding 20 acres of land in West Dublin for c. €15m. The 20 acres were rezoned for residential development in 2016 with the stipulation that the lands include a GAA pitch and clubhouse. The golf course is still zoned as amenity lands. Hollystown was first opened in 1992 by Oliver Barry, a concert promoter and head of Ireland’s first commercial radio station, Century Radio. The Sunday Times, 21st January
Dublin Floating Homes: Dún Laoghaire Harbour Company is progressing its plans to develop 50 floating homes as part of a feasible solution to the housing crisis. The new scheme would see new homes permanently moored at a pontoon on the western end of Dublin Bay. The initiative is modelled on similar water-based developments in the US and Canada and it is envisaged that the units would be similar to two and three-bedroom apartments with floor ranges of 800 – 900 sq. ft. and cost in the range of €300k – €350k. The project is currently in the procurement stage and timing of the project will very much depend on the responses during the formal tender and planning process. The Sunday Independent, 21st January
Mount Merrion Site: Lisney is seeking offers of €7.5m for a prominent 0.84-acre site with full planning permission for 48 apartments on Deerpark Road in Mount Merrion, South Dublin. The impressive building was originally designed as the Stella Cinema Mount Merrion and is currently occupied by furniture retailer Flanagan Kerins. The current owners of the site obtained planning permission in 2016 for a six-storey development, comprising 48 dual-aspect apartments with balconies and four offices over 92 car spaces. The property is being sold with the benefit of a current income of €73k, and all tenancies include appropriate break clauses required to obtain vacant possession. The Sunday Business Post, 21st January
INDUSTRIAL
Finglas Industrial Portfolio: CBRE has brought two substantial industrial portfolios in Finglas to the market with a guide price of €18m. The multi-tenanted parks in Jamestown Business Park and Century Business Park are based along the N2 corridor with easy access to Dublin Airport and the Dublin Port Tunnel. The portfolio consists of c. 429,000 sq. ft. of space in total and produces an annual rental income of €1.327m. The portfolios are available for sale separately or as a single lot, with Jamestown Business Park guiding €12.2m and Century Business Park guiding €5.8m. The Irish Times, 16th January
Core Industrial Plc: The Irish Times reports that the US hedge fund York Capital is seeking to raise between €200m and €250m via the flotation of a new Irish industrial and logistics property investment trust named Core Industrial Plc. The seed assets reportedly being introduced into the vehicle are industrial units in Rathcoole, Clondalkin and Finglas in Dublin which the company acquired in recent years. Additional assets in Naas and Kilcullen in Co. Kildare and Clonee in Co. Meath are also being considered as potential seed assets. Credit Suisse and Davy are advising on the flotation. The Irish Times, 17th January
OTHER
Cork Investment Market Review: Aoife Brennan of Lisney reports on transactional activity in Cork in 2017 and provides an outlook of the market for 2018. Among the most notable findings was that the investment activity in Cork in 2017 of €200m was c. 9% of the national figure, a substantial increase from recent years where Cork averaged 4% of the national total. The office sector saw c. 183,000 sq. ft. of space transacted, 51% of which was in the technology sector. The purpose-built student accommodation sector is also becoming more significant, with between 500 and 750 beds expected to be completed in Cork this year. The Irish Examiner, 18th January
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