24th October (Issue 119)
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.
COMMERCIAL PROPERTY PRICES
JLL Commercial Property Index: New figures from JLL have shown that commercial property prices rose by 2.6% in Q3 2017, the 18th consecutive quarter of growth, and the most substantial quarterly increase since Q1 2016. The figures mean that for the 12-month period ending September 2017, prices have increased by 7.5%. The office sector was the best performing sector for the quarter, with prices rising by 4.6%. Prices in the industrial sector rose by 2% while in the retail sector, prices were flat for the second quarter in a row. While the commercial property market has performed strongly YTD, the Q4 2017 figures will be eagerly awaited to assess the impact of the recent trebling of commercial property stamp duty in the 2018 budget. NAMA Wine Lake, 22nd October
LOAN / PORTFOLIO SALES
Project Redwood: The Irish Independent reports on AIB’s upcoming Project Redwood portfolio sale, for which the sales process is expected to commence at the end of the month. The face value of the portfolio is expected to exceed €3.76bn, and the portfolio will consist of 10,901 loans. Commercial property investment loans account for the largest portion of the portfolio, with the 1,242 loans having a par value of €941m (average c. €760k). Buy-to-let mortgages account for €702m of the par value, with the 2,712 loans having an average balance of c. €260k. The portfolio also includes €108m of commercial development loans and €693m of loans attached to land. The Irish Independent, 20th October
Shoreline Residential Portfolio: The Sunday Times reports that Bank of Ireland has acquired a portfolio of more than 1,000 restructured residential mortgages from Shoreline Residential, a company affiliated with Lone Star, for an undisclosed amount. The transaction represents the second portfolio acquired by the bank from Shoreline, with the previous portfolio purchase occurring in 2016. The Sunday Times, 22nd October
RETAIL
Bewley’s Oriental Café: The famous Bewley’s Oriental Café on Grafton Street is due to re-open in November after the completion of a substantial refurbishment which cost more than €12m. The café closed in February 2015, and Bewley’s originally intended to embark on a limited six-month refurbishment, however this was extended to a 33-month project which resulted in a complete overhaul of the property. The key attractions of the new café will be the new chocolate factory and high-end bakery, while the upstairs theatre has been completely rebuilt to accommodate over 500 customers. The investment is intended to position the venue as a landmark tourist destination in Dublin. The Sunday Business Post, 22nd October
88 – 92 Townsend Street: TWM are guiding €2.7m for 88 – 92 Townsend Street in Dublin’s south docklands. The buildings are fully rented and could have redevelopment potential, having previously had planning permission for a redevelopment which has since lapsed. A feasibility study by Darmody Architects suggests a redevelopment could extend to 13,680 sq. ft., subject to planning permission. The buildings are currently rented to the Dublin South East Community Training Centre and Darmody Architecture, producing a combined rent roll of €143k p.a. The Irish Times, 18th October
CBRE Vacancy Survey: The latest release of CBRE’s twice-yearly vacancy survey has shown that occupier activity has mainly been positive on the high streets of 10 Irish towns and cities for the six month period ending Q3 2017. As a result, none of the urban centres included in the report showed a decrease in occupancy rates, while four showed an increase in occupancy levels. Killarney showed the biggest decrease in vacancy rates, dropping from 6.8% at the end of Q1 2017 to 1.9% at the end of Q3 2017. Athlone recorded a fall from 12.4% to 9.3% over the same period, while Cork’s vacancy rate decreased slightly from 9.9% to 9.1%. Vacancy rates in Limerick (8.5%), Waterford (5.8%), Belfast (6.0%) and Kilkenny (4.3%) remained relatively stable over the period, while Dublin’s rate remained at 3.9%. The Irish Independent, 19th October
OFFICE
Lower Grand Canal Street Offices: Knight Frank are guiding €13.25m for a 20,000 sq. ft. newly refurbished and extended office building located on Lower Grand Canal Street in Dublin 2. The property, which is leased to the serviced office provider Iconic, was recently redeveloped and enlarged through the provision of an additional floor. Iconic is paying a rent of c. €791k p.a. for the property under two 25-year leases, with the leases reflective of rents of c. €40 psf for the office space and €2,750 p.a. for each of the 11 car-parking spaces. The leases provide for a rent review every five years, and a tenant break option in 2028. The Irish Times, 18th October
Citywest Business Park: Lisney are inviting offers of c. €6.8m for nine modern business units in the Citywest Business Campus in west Dublin. The sale covers nine of the 10 units located in two blocks extending to 44,358 sq. ft., and the units are fully let to a range of tenants including euNetworks, TDS and KCI / Acelity. The units are a combination of high-spec office units and warehouse / office facilities, and 100 surface-level car-parking spaces are available for use in the complex. The rental income from the portfolio is €555k p.a., offering a yield of c. 7.5%, and the weighted average unexpired lease term is in excess of six years. The Irish Times, 17th October
5 School House Lane: Savills are guiding a rent of €57.50 psf for refurbished office space at 5 School House Lane in Dublin 2. The property has recently undergone a six-month, €3.5m upgrade and extension, and now extends to 16,000 sq. ft. The property, which is owned by Kennedy Wilson Europe, is located just a few minutes away from Grafton Street, close to the Luas, DART and several bus routes, and is available for immediate occupation. The Irish Times, 17th October
HOTEL
Dublin Hotel Room Rates: New data from STR Global shows that the Dublin hotel market continues to perform strongly, with revenue per available room (RevPAR) rising by 7.5% for the nine month period ending Q3 2017, and occupancy rates rising by 0.3% in the same period. RevPAR growth was also strong outside of Dublin, with an increase of 9.9% recorded YTD. The Irish Independent, 20th October
Roganstown Hotel: The owners of the Roganstown Hotel & Country Club have sought planning permission for a 63-bedroom extension to the 52-bedroom, four-star hotel which is near Swords in north Dublin. The Sunday Times, 22nd October
Dublin Hostel: Abbey Celtic Café has sought planning permission from Dublin City Council to develop an 88-bed hostel on Abbey Street Upper, near O’Connell Street in Dublin city centre. The directors of Abbey are Colm Wu and Brendan Liddy. The Sunday Times, 22nd October
RESIDENTIAL / LAND
Tracker Mortgages: As the banks work to identify the full number of affected borrowers in relation to the overcharging of tracker mortgages, the governor of the Central Bank, Philip Lane, said he expects the majority of the confirmed 13,000 cases to receive compensation and refunds before Christmas. To date, lenders have paid out c. €163m to affected borrowers, with total provisions of c. €573m having been made to cover the costs of the redress project. The Irish Times, 24th October
Build Costs: A new report by the Society of Chartered Surveyors Ireland (SCSI) analyses the cost of developing apartments in the Greater Dublin Area, and finds that the only category of apartment which is both commercially viable to develop and also affordable to first-time buyers is a low-rise apartment in the suburbs. The report also discusses the perception that building upwards is more lucrative for developers, and states that this is often not the case as larger structures are often more complex, and also have greater mechanical and electrical services. The report finds that the actual costs of developing an apartment are c. 43% of the total cost, with soft costs (VAT, levies, margins and fees) making up 41% and site costs making the up the final 16%. The Irish Independent, 24th October
Glenveagh Shareholders: The Sunday Times reports that following its recent IPO, the largest shareholders in Glenveagh Properties are Oaktree (17.9%), the Singapore government (10.2%) and UBS (7.25%). Other investors include Fidelity, JP Morgan, Lansdowne Partners and Capital Group Companies. The Sunday Times, 22nd October
Elmfield Apartments: SW3 Capital has paid €51m to acquire Elmfield, a block of 138 apartments in Leopardstown, south Dublin. The fund purchased Elmfield in an off-market transaction alongside their main backers, Tristan Capital Partners, with SW3 set to take a minority interest in the project. Elmfield consists of three standalone buildings, two of which are already 100% leased. The 54 multi-family units in the third building are being offered for letting immediately. SW3 and Tristan Capital Partners will also acquire a further 47 units located within the remaining two buildings in the Elmfield estate before the end of 2017, which will increase the number of apartments under their ownership to 185. The Sunday Business Post, 22nd October
Halcam Court: Knight Frank are guiding over €6.5m for Halcam Court, 61 Pembroke Road, in Dublin 4, one of the largest houses in Ballsbridge. The property is divided into 15 apartments with three mews houses to the rear, and currently produces a rent roll of c. €362k p.a. Originally built in 1843 as a private house, the property has been extensively refurbished and extended over the years, and now contains nine one-bedroom apartments, six two-bedroom apartments, two two-bedroom mews houses, and one three-bedroom mews house. In addition, there is an enclosed courtyard with 21 car parking spaces, bicycle parking and bin storage. The guide price for the property equates to €465 psf, which is about half the capital value of a number of apartments being constructed nearby. The property was previously acquired by Gerry Gannon in 2004 for €9.3m. The Irish Times, 28th October
Development Sites Sale: Knight Frank are seeking buyers for development sites in Tyrrelstown, Dublin 15, and Kilcock, Co. Kildare. The sites in Tyrrelstown are being offered for sale in one or two lots on behalf of the receiver, Mazars, with an overall asking price of €4.5m. The larger site extends to 30.42-acres, while the smaller site extends to 3.24-acres. The area is zoned for ‘high technology’ use to include office, research and manufacturing employment. The 5.23-acre Kilcock site in Kildare is located in the town centre and is being offered to developers under a licence agreement from the receiver, Grant Thornton. It comes with planning permission for 45 three- and four-bedroom semi-detached and detached houses and 18 one- and two-bedroom apartments. The Irish Times, 17th October
15 Merrion Square North: Cushman & Wakefield are guiding €4m for 15 Merrion Square North, a large Georgian property in Dublin 2. While the 7,933 sq. ft., four-storey over basement property is currently laid out for office use, there is also planning permission in place to convert the property into a luxury home. There is also planning permission on the site for the development of a five-storey building to the rear (fronting onto Denzille Lane), containing four new apartments and six surface-level car parking spaces. The Irish Times, 17th October
Coillte Galway: Semi-state forestry group Coillte hopes to receive planning permission for c. 59 houses on a 7.9-acre site it owns in Moycullen, Co. Galway in mid-to-late 2018. The site is one of three identified by the company as surplus to its own operations and potentially suitable for residential development, with the other two sites located in Cork and Mayo. The Galway site is expected to consist of a number of two- to four-bedroom semi-detached homes, and possibly some five-bedroom units. Coillte is exploring its options for the development of the site, as the agency may yet decide to sell the site to interested developers, or alternatively it could partner with a third party to develop the site. The Irish Times, 23rd October
OTHER
NUI Galway Campus: The European Investment Bank (EIB) has agreed to provide NUI Galway with €60m of debt to facilitate a new campus development. The facility will be used to help fund the construction of new student accommodation and a new building for the College of Medicine, Nursing and Health Sciences. The funding marks the completion of a €675m EIB Irish University programme, whereby low-cost, long-term financing has been provided to support capital investment at Irish universities. RTE, 23rd October
Carrickmines Development Site: Savills are guiding €3.6m for a 2.175-acre site adjacent to Leopardstown Valley Shopping Centre in Carrickmines, Co. Dublin. The site has planning permission for a 224-bedroom nursing home with a basement-level car park. The Irish Times, 17th October
67 Leeson Street Lower: Cushman & Wakefield are guiding €2.75m for the former Buck Whaley’s nightclub on Leeson Street in Dublin 2, which was recently rebranded as the Stone Leaf Bar & Terrace. The property, which is located at 67 Leeson Street Lower and to the rear of number 68, is being sold on the instructions of the receiver, Deloitte. The 9,200 sq. ft., four-storey, over-basement Georgian property contains ample entertainment and office space in addition to a two-bedroom apartment, and there is an interconnecting mews to the rear. The property is being sold with vacant possession. The Irish Times, 17th October
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