29th November (Issue 375)
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
Dundalk, Co Louth A fund managed by Davy Real Estate is closing in on the purchase of the Marshes Shopping Centre in Dundalk. According to market sources, the Davy investors are on track to secure ownership of the scheme for c. €30m, or €3.5m less than the €33.5m Kennedy Wilson had been guiding when it offered the centre to the market through joint agents Bannon and CBRE in June. While the proposed purchase price equates to a c. 10% discount on that guide, it represents an even steeper discount of 33% on the €44.5m the US-headquartered real estate firm paid for the Marshes in 2014. The Marshes Shopping Centre is anchored by a 71,600 sq. ft. Penneys and a 116,500 sq. ft. Dunnes Stores (grocery and drapery) and is approaching a 100% occupancy rate. Outside of its anchor tenants, the centre is generating a NOI of c. €3.4m from a number of major retailers including Boots, H&M, Eason and JD Sports. The scheme’s car park generates c. €400k income. The Irish Times, 23rd November
OFFICE
Lower Mount Street, Dublin 2 Ireland’s only not-for-profit fertility clinic, Merrion Fertility, has signed up as a tenant at Behan House on Lower Mount Street in Dublin 2. The company is expanding its office operations, and has agreed to lease the third floor of Behan House comprising 2,214 sq. ft. for a 10-year term commencing this month. Merrion Fertility will join tenants KSI Faulkner Orr Ltd, Cora Engineering, Irish Universities Quality Board, Ecovis DCA and Quality Qualifications Ireland in the fully-let building. A rent of €41.58 per sq. ft. is believed to have been agreed between the parties. The Irish Times, 23rd November
Glasthule, South Dublin An office investment property with development potential in Glasthule, south Dublin will be auctioned by QRE Real Estate Advisers on the Offr auction platform in early December. The office investment at 1-4 Adelaide Road, Glasthule, comprises a three-storey standalone building extending to 10,750 sq. ft. and it has a €1.95m guide price (NIY 5.5%) for auction. Fully let to Houlihan Cushnahan & Co at a contracted rent of €107.25k pa, its 20-year lease dates from September 2007, with expiry due in August 2027. There are tenant-only break options in 2024 and 2026 and an outstanding rent review dated 2022. The Irish Independent, 24th November
Ballsbridge, Dublin 4 Amancio Ortega, the Spanish billionaire founder of the clothing chain Zara, has yet to decide whether to buy the €550m Fibonacci Square development in Ballsbridge from the US private equity giant Fortress Investment Group. Ortega’s family office, Pontegadea Inversiones, has been in talks to buy the landmark site, which has been leased to Meta, the owner of Facebook, for some time. The continuing negotiations over the property, weakening global economy and technology sector slowdown have prompted speculation about the strength of Ortega’s appetite for this slice of commercial real estate. Although the Ballsbridge campus is earmarked as the headquarters of Meta’s EMEA operations, it is not clear whether Meta intends to occupy the entire site. The US giant has accepted a lease with a 15-year break term. The Sunday Times, 27th November
HOSPITALITY
Grafton Street, Dublin 2 The Bewley’s cafe on Grafton Street made a loss of €1.7m last year, new accounts show, due to the impact of Covid-19 lockdown restrictions and a failure to secure a rent reduction from its landlord, Ronan Group Real Estate. The cafe posted turnover of just under €1.2m last year, up from €990k in 2020, when the pandemic first impacted on the economy. However, costs of c. €2.7m, including rental costs to Mr. Ronan’s company of just under €1.5m, and an interest charge of €202k pushed the company into the red. The accounts also show that an agreement with its parent entity on “sufficient discretionary financial support” for it to continue to operate as a going concern has yet to be “formalised”. The Irish Times, 28th November
West Clare The Donald Trump-owned Doonbeg golf resort in west Clare recorded operating profits of €509.8k last year. Accounts show that the former president’s TIGL Ireland Enterprises Ltd made the profit after operating losses of €1.98m in 2020 — a swing of €2.49m. Revenues rose by 90% or €3.4m from €3.76m to €7.17m. The business was boosted by “staycationers” last summer as many people opted to holiday in Ireland due to Covid-19 restrictions. Government grants worth €1.84m were a key factor. The group recorded a pre-tax loss of €1.55m but only after taking into account hefty non-cash depreciation and amortisation charges of €2.05m. Numbers employed at the resort last year rebounded from 112 to 137 and staff costs last year increased from €3.54m to €4.82m. The Trump Organisation has ploughed more than €40m, including the purchase price, into the resort since its purchase in February 2014. The company recorded a gross profit of €6.1m last year and administrative expenses of €7.47m offset by “other operating income” of €1.84m, which resulted in the operating profit of €509.8k. The Sunday Times, 27th November
Hospitality Outlook Hotel room occupancy rates over the first ten months of the year remain down on the same period in the year before the Covid-19 pandemic struck, despite the recovery in tourism this year. Average occupancy rates between January and October stood at 71% nationally and 75% in Dublin, a new survey of Irish Hotels Federation (IHF) members has found. That compares to 80% and 84% respectively over the same ten months in 2019. IHF members are also concerned about the outlook for next year, the data shows, due to the economic downturn and low consumer confidence. 60% of hotels reported that their bookings for Great Britain for next year are down compared to 2019, while 38% said reservations from the rest of Europe are lower. However, hoteliers said the US market was looking more balanced. Despite the Government helping hoteliers with rising energy costs through the Temporary Business Energy Support Scheme, the IHF says qualification criteria is too restrictive, with the cost of food, linen and laundry, beverages and insurance all rising by as much as a third. RTÉ, 28th November
MIXED-USE
Glenageary, Co Dublin The recent sale of a fully let mixed-use investment in south Co Dublin saw strong interest from a range of parties. Having been offered to the market by Lisney at a guide price €1.4m, no. 62-63 Mounttown Road Lower in Glenageary was sold for €2.185m (NIY 5.54%) following a highly competitive process involving 45 inquiries, which resulted in 19 bids from eight parties. The subject property briefly comprises a two-storey mixed-use building extending to 5,400 sq. ft. The part ground floor of the building’s front consists of a retail unit currently trading as Allcare Pharmacy. The remaining ground floor space and the entirety of the first floor, meanwhile, comprises 4,747 sq. ft. of office space let to three tenants. The entire property is 100% occupied and was generating a passing rent of €133k pa at the time of sale. The Irish Times, 23rd November
STUDENT ACCOMMODATION
Student Accommodation Hundreds of rooms on college campuses will be let to students at reduced rates in exchange for State funding under plans due to be approved by Cabinet on Tuesday. Minister for Higher Education Simon Harris will seek Government approval to significantly increase the supply of student accommodation in a move which could see 700 beds made available in Maynooth, Limerick and Galway in the first instance. Ministers will also agree to continue negotiations with two other colleges with planning permissions on providing State support in return for ring-fencing rooms at a reduced rate. There will also be funding available to Technological Universities to prepare business cases for on-site accommodation. The Irish Times, 29th November
RESIDENTIAL / DEVELOPMENT
Fairview Avenue Lower, Dublin 3 Landlords looking for immediate rental income in a strong location will be interested in the sale of no. 10 Fairview Avenue Lower in Dublin 3. The investment, which comprises 10 residential rental units, is being offered to the market by Cushman & Wakefield at a guide price of €2.75m (NIY 5.2%). Built in 1993, the property briefly comprises one bedsit, three one-bed and two two-bed apartments, and four two-bed duplexes. The portfolio is fully occupied and is producing total rental income of €143k pa. The Irish Times, 23rd November
Cherrywood, South Dublin The funding and delivery of thousands of new homes in south Dublin remains at risk over a failure to reach agreement around the supply of electricity, roads, and other common infrastructure, the Department of Housing has warned. The Cherrywood Strategic Development Zone project in south Dublin aims to deliver more than 8,700 new homes which will accommodate a population of 25k people but has been beset by legal complications and infrastructural delays. Hines had developed c. €57m of public infrastructure as part of the project and claimed there was no lawful basis to demand the €31.5m in contributions as a result. The case was settled in March this year. The cost of delivering these works is estimated at €200m. The council has identified a €76m funding gap to deliver the remainder, which it said is the responsibility of the landowners. The Business Post, 24th November
Housing Delivery, Ireland It has emerged that 11 local authorities, including three in Dublin, failed to deliver a single new-build house in the first six months of this year, with just 647 homes directly built as the State’s housing emergency worsened. New figures released by Housing Minister Darragh O’Brien’s own department reveal that just 251 homes were directly built in the first quarter of 2022. During that time period, 18 of the 31 local authorities delivered no new homes. In the second quarter, 396 homes were delivered but still 12 counties failed to produce a single new home. Wicklow County Council had produced the most new homes, with 113 units coming on stream. According to the department, the new-build category since 2017 includes those homes delivered through its rapid build programme, so-called traditional construction, turnkey homes bought from developers, regenerated properties, and those built through public-private partnerships (PPPs). The Irish Examiner, 28th November
Raheny, Dublin 5 Marlet Group has lodged an appeal with An Bord Pleanála against Dublin City Council’s decision to refuse planning permission for 580 apartments on a site near St Anne’s Park in Raheny in north Dublin. Last month City Council concerns over the light-bellied Brent goose put paid to the contentious residential plan for the 16.5-acre site on lands to the east of St Paul’s College at Sybil Hill. The appeal is the latest twist in the long-running planning saga for the site since it was purchased in 2015. The Irish Times, 25th November
Kimmage, Dublin 12 A residents’ group has initiated High Court proceedings aiming to quash planning permission for a €106m apartment scheme in Kimmage, Dublin 12. The Kimmage Dublin Residents Alliance says An Bord Pleanála’s fast-track approval for the 208-unit, six-storey development was invalid. More than 75 objections were lodged, including from local TDs and councillors, against the proposals by Lioncor Developments subsidiary 1 Terenure Land Ltd for the five blocks on an L-shaped site next to a large gym. The project comprises 104 one-bed apartments and 104 two-bed apartments, with 21 to be sold to Dublin City Council for social housing. The Irish Times, 25th November
Blackrock, South Co Dublin Residents of Blackrock, south Co Dublin, have initiated their second High Court challenge to planning permission for hundreds of apartments in Temple Hill granted to the co-owners of the Press Up Hospitality Group. An Bord Pleanála conceded last month in the residents’ judicial review over an April 2022 approval for 493 apartments in a €182m development at the site of St Teresa’s House. The Irish Times, 28th November
OTHER
Metrolink, Dublin Consultation on the Metrolink rail line, which will connect Dublin Airport with the city, has been extended into next year due to a missing document in the planning application. State transport agency Transport Infrastructure Ireland (TII) submitted a planning permission two months ago to An Bord Pleanála for the line, which will run from Swords and serve Dublin Airport and the city centre, terminating at Charlemont near Ranelagh. The deadline for submissions on the mostly underground line was due to expire on Friday but will be extended to January 16th next year. The missing document was an appendix to the traffic and transport assessment of the St Stephen’s Green Station. A spokesman for TII said it was not expected that the additional consultation time would cause “any significant delay” to the project. Construction is expected to start in 2025, with the building phase taking c. nine years. The Irish Times, 25th November
Ukranian Refugee Housing, Ireland CIE, the state’s transport authority, is not considering making any of its property available to Ukrainian refugees for accommodation, it has emerged. It comes as the government struggles to develop enough suitable housing for Ukrainian refugees amid an ongoing shortage of supply. The government has said the number of Ukrainians seeking accommodation here will exceed 70,000 by the end of the year. Roderic O’Gorman, the Minister for Integration, on Tuesday confirmed that the government would stop using tents to house refugees as it expands on a strategy of refurbishing vacant properties around the country. The Business Post, 24th November
Offshore Wind Projects, Ireland Bord na Móna, the semi-state energy company, has announced plans to develop multiple offshore wind projects off the east coast of Ireland over the coming decade as part of a joint venture with Spanish developer Ocean Winds. These offshore wind projects will deliver a combined 2,300 MW of energy capacity – equivalent to one third of the country’s entire power demand or enough to power up to 2.1m homes. The first project planned by the new joint venture between Bord na Móna and Ocean Winds comprises the Réalt na Mara offshore wind project, which will have an overall capacity of 1,600 MW and be located 12km off the coast of south Dublin and north Wicklow. The second project the companies plan to deliver is the Celtic Horizon offshore development, which will see a 700 MW capacity fixed bottom wind farm constructed c. 14km off the Wexford and Waterford coastline. The Business Post, 23rd November
Rent Levels, Ireland The average rent in new tenancies in Dublin has increased to above €2k a month amid a general rise in prices. The latest rent index from the Residential Tenancies Board (RTB) found the average monthly rent for new tenancies registered between April and June was c. €1.4k. This was up from c. €1.3k during the same period in 2021, an 8.2% increase. Newly listed rents in the capital rose by a similar amount, jumping from c. €1.8k a month in the second quarter of 2021, to c. €2k. This represented an annual change of 8.8%, slightly above the national average. There were 12,701 new tenancy registrations during the second quarter of 2022, which was a significant decrease of 16% compared to the number of new tenancies registered during the same period in 2021, when the figure stood at just over 15,000. The county with the lowest monthly rents were in Donegal, where the standardised average rent in new tenancies stood at €783 per month. The county with the fastest growing standardised average rent in new tenancies during the quarter was Leitrim, which reported 20% YoY growth. Fourteen counties had an annual growth rate in new tenancy rents above 10% during the second quarter of 2022. The Business Post, 24th November
Planning System Overhaul, Ireland The government is proposing a “radical” overhaul of the planning system under new legislation currently being drafted. It is understood that the government is considering reforms to An Bord Pleanála, including changing the body’s name to the Planning Commission. According to market sources, judicial review reforms will be designed to make it more difficult for individuals or groups to object to big infrastructural projects and will include a new materiality test, where an individual will have to prove the material impact of a project on him or her before being allowed to appeal the development. Additionally, individuals and organisations will be allowed to take judicial review proceedings against a project only after they have exhausted all other avenues for participation in the regular planning process. Over the last five years, the number of judicial review challenges listing An Bord Pleanála as a notice party has more than doubled. Between 2016 and 2021, c. 350 judicial review challenges have been taken against An Bord Pleanála decisions, with c. 100 challenges brought this year alone. The new Consolidated Planning bill also introduces mandatory timelines for An Bord Pleanála to complete planning applications and provide final decisions within a statutory timeframe. Finally, the new planning bill is expected to introduce changes to the length of time planning permissions last for, as well as extending the duration of county development plans from six years to ten years. The Business Post, 26th November
Social Housing, Ireland Local authorities will be offered €100m to pay off debts on condition they develop modular homes for accelerated social housing in the next two years. In a letter to local authorities on Monday the Department of Housing outlined that lands where debts will be covered have to be suitable for the “immediate development” of social housing with construction in 2023 or “no later than 2024″ with “use of accelerated delivery models, principally off-site construction [and] modern methods of construction”. The initiative by Darragh O’Brien, the Minister for Housing, comes against the backdrop of record numbers in emergency homeless accommodation, with 11,397 people now registered, 3,480 of whom are children. Government sources believe 3,000-5,000 modular-built social houses can be delivered next year using this scheme. Participating councils will be given access to two funding pots totalling hundreds of millions of euros to cover legacy debts. Local authorities carry more than €300m in land legacy debt. €100m is being made available to deal with these debts, with another €125m set aside for purchasing more land for housing. The Irish Times, 25th November
Refugee Accommodation Hundreds of Ukrainian refugees based for months in a Clondalkin hotel have been moved to new accommodation in Cork, Dublin, Limerick and Donegal. 220 residents of the Ibis hotel near the west Dublin village learned in mid-November they would be moved elsewhere to make way for international protection applicants. Most of the other people moved on Monday to Trabolgan holiday centre in Co Cork, while others were taken to a former convent in Bruff, Co Limerick, and a small number were taken to Co Donegal. The Irish Times, 28th November
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