2nd May (Issue 395)
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.
MIXED-USE
Tallaght, Dublin 24 The Arena Centre in Tallaght is being offered to the market at a guide price of €45m (NIY 7.62%). The sale of the investment by JLL comes just more than three years on from its acquisition by UK-headquartered private equity real estate manager Henderson Park, which secured ownership of the scheme as part of its record-setting €1.34bn purchase of Green Reit. Located at the junction of the N81 and Whitestown Way in Tallaght, south Dublin, the Arena Centre is a substantial mixed-use development extending to 321,385 sq. ft in total. The scheme comprises 99,324 sq. ft of retail space across eight units, 98,137 sq. ft of office accommodation, a 119-bedroom Maldron hotel, which includes an adjoining leisure centre, and a central surface car park which provides car parking for retail customers. The investment is 98% occupied and offers a WAULT to break/expiry of approx. 6.8 years and an annual income of €3.77m. The Irish Times, 26th April
Terenure, Dublin 6W Lisney is guiding €3.4m for a commercial investment portfolio in Terenure, Dublin 6W. The offering consists of Nos. 8-12, Terenure Place, No. 2 Templeogue Road and unit 11A on Rathfarnham Road, and is generating overall rental income of €245.07k pa from a mix of tenants. This income could increase by €35k pa subject to the leasing of a vacant restaurant unit. The properties collectively extend to 14,245 sq. ft on a site of 0.533 acres facing on to the junction where Terenure Place, Templeogue Road and Terenure Road West merge in the centre of the village. The entire plot is zoned “Z4 key urban village” in Dublin City Council’s development plan and is suitable for a variety of uses, subject to planning permission. The Irish Times, 26th April
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HOSPITALITY
Dame Lane, Dublin 2 The company behind McGowans of Phibsboro and Bad Bobs pubs and restaurants in Dublin is thought to be close to buying the late-night venue 4 Dame Lane in the city centre. It was reported in November that Paul Keaveny, the owner of 4 Dame Lane, was mulling a sale of his hospitality empire, which includes the Dakota and Odeon bars, for approx. €25m to €30m. Before the pandemic the Cavalier Tavern, the parent company for the McGowans’ pubs, had revenues of more than €8m, dropping to approx. €2.5m in 2020. However, the company had retained earnings of approx. €10m at the end of 2021, latest accounts show. The Sunday Times, 30th April
Kilkenny BDM Property is handling the sale of a prime hotel development site in Kilkenny city with full planning permission, for which it is guiding €3.75m. The site is located at John’s Green/Wolfe Tone Street, which is just off John Street. The proposed scheme provides for the development of a five-storey, 114-bedroom hotel and the construction of a new bar and restaurant pavilion within the grounds. The planning consent provides for an average room size of 188 sq. ft. The Business Post, 29th April
OFFICE
Sandyford Damovo Global Services has signed for a new headquarters office at the Sandyford Business District (SBD) in south Dublin. The company, a specialist in the provision of ICT services, has agreed to occupy the penthouse office at Blackthorn Exchange on a new 10-year lease with a break option in year seven at a rent of €27 per sq. ft. QRE Real Estate Advisers handled the letting of the office, which extends to 3,395 sq. ft, on behalf of the landlord, Mount Amber Investments. With Blackthorn Exchange now fully occupied, Mount Amber Investments will focus on letting the remainder of the space available at its other Sandyford office scheme. QRE is offering two fully refurbished floor plates of 10,250 sq. ft (20,500 sq. ft in total) to let immediately at Corrig Court. The refurbished office space is available at €26 per sq. ft. The Irish Times, 26th April
South Docks, Dublin 4 Avison Young has launched the sale of Riverbank House, a prominent office block at the junction of Ringsend Road and South Lotts Road, in the heart of the South Docks, Dublin 4 for in excess of €3.2m. Riverbank House is fully let to a single tenant at a rent of €245k pa with redevelopment potential for residential or mixed-use, subject to planning permission. Riverbank House comprises a three-storey office block totalling approx. 6,307 sq. ft, with eight secure surface car-parking spaces. It is on a prominent corner site of 0.18 acres, leased until 2025. The Business Post, 29th April
RETAIL
Adamstown, West Dublin McCabes Pharmacy and Kerrigans Craft Butchers are set to open new stores at The Crossings as part of the urban village development in Adamstown, west Dublin. The two Irish-owned family businesses will join supermarkets Tesco and Aldi, which opened stores in April, as part of the €500m residential development by Quintain, the housebuilding unit of US private-equity giant Lone Star. McCabes Pharmacy’s new store will be its 29th outlet nationally, while Kerrigans already has five outlets in Dublin. The Irish Times, 26th April
RESIDENTIAL / DEVELOPMENT
Quayside Quarter, Dublin Docklands Greystar and its institutional partners are putting up for sale three rental assets located in Dublin, Frankfurt and The Hague for a guide price of between €375m and €400m. The Dublin property is the most valuable asset being sold by Greystar and its partners, with an estimated value of €200m. It is a 13-acre waterfront mixed-use scheme called Quayside Quarter, which Greystar bought from Ballymore in 2019 for €175.5m. The property has 268 luxury apartments and amenities such as offices, shops, and restaurants. React News, 2nd May
Sandymount, Dublin 4 Finnegan Menton has 21 luxury apartments for sale in a single block, for which it is guiding €10m (6% yield). The agent has been instructed to sell 18 apartments and three penthouse units within Block A of The Willows on Claremont Road in Sandymount. The block comprises 15 two-bedroom apartments of between 840 and 1,120 sq. ft; three one-bedroom units of approx. 645 sq. ft; and the two-bedroom plus study penthouses, which span 1,439 to 1,496 sq. ft. The units are situated over four floors with underground car parking and individual lock up stores. The apartments are currently leased and the gross annual income is just above €600k. The Business Post, 29th April
For lending terms on this asset please contact rossmetcalfe@origincapital.ie
Ballsbridge, Dublin 4 Sherry FitzGerald Commercial has launched 46-48 Pembroke Road. The property is being offered via private treaty, seeking offers in excess of €3.5m. It comprises two interconnecting Georgian properties, extending to approx. 6,157 sq. ft across four stories including basement level. The property has a development site to the rear with the benefit of full planning permission for two three-bedroom mews dwellings of approx. 1,776 sq. t and 1,894 sq. ft respectively. The Business Post, 29th April
Rent a Room The Government hopes to add the equivalent of 28,000 homes across the country by allowing council tenants to rent out rooms in their houses for up to €14k a year, tax-free. Under the current Rent-a-Room scheme, property owners can rent out rooms in their houses and apartments for €14,000 tax-free per year. For the first time, council tenants will also be able to rent out their spare bedrooms as increasing numbers of landlords sell up and the rental market shrinks. There are approx. 140,000 council homes across the country, of which between 14,000 and 28,000 are “under-occupied”, the Department of Housing believes. The Irish Independent, 2nd May
Construction Two residential projects in Sandyford and Donabate that are due to deliver approx. 220 homes have been shut down in the last week after the main contractor ceased paying creditors over recent months. Shapoorji Pallonji, the Indian construction conglomerate, is understood to have defaulted on a number of payments to sub-contractors in the last two months and the company now owes up to €2m to a range of trade creditors. One sub-contractor alone is owed more than €250k by the company. Sources who spoke to the Business Post said they were hopeful both projects would be completed once the respective developers brought proceedings to terminate the contracts issued to Shapoorji. Both developers are understood to be seeking out new building contractors to finish the respective projects. Business Post, 30th April
An Bord Pleanála should be in a position to clear the backlog of 27,000 homes awaiting determination by the end of the year, its interim chairwoman has told the Public Accounts Committee (PAC). Oonagh Buckley said the board was now back to a strength of 15 — having fallen to three late last year — and was back to determining planning cases. She said that while 27,000 housing units were awaiting a pending decision at the start of 2023, inroads were now being made. In his opening statement to the PAC, the Comptroller and Auditor General said that fines imposed on An Bord Pleanála for failing to decide on SHD applications within the applicable statutory time period shot up dramatically between 2021 and 2022. There was only one fine imposed in 2021 which cost €10k. However, there were 134 cases in 2022 where the deadline was not met, resulting in fines of €1.34m. Ms Buckley indicated it could be attributed to a glut of SHD applications up to April 2022 as the legislation governing that type of development was ending. It coincided with the well-publicised problems the board had during 2022. Irish Times, 28th April
Knight Frank New Homes Construction Survey The planning process is now the greatest barrier to increasing housing output in 2023, topping cost concerns which were identified as the main obstacle to delivery in 2022. These are among the findings of the latest Knight Frank New Homes Construction Survey. Overall, a planning application could take approx. four years to be successful as 33% of respondents, representing members of the building community, report that it is taking between seven to 12 months to receive a grant of planning permission from a local authority. 32% believe that an appeal could add 11-15 months to the planning process while 46% estimate that a judicial review could add more than 21 months to the planning process. 43% believe annual building material and labour cost inflation will range between 7-9%. In addition, successive interest rate increases over the past year will make the task of raising development finance even more difficult this year according to 72% of respondents. As many as 92% are concerned that the residential zoned land tax could impact viability of related sites. The Irish Independent, 27th April
Residential Zoned Land Tax (RZLT) Large developers and landowners, including Cairn Homes and Park Developments, have lodged more than 60 appeals with An Bord Pleanála in a bid to avoid significant land-hoarding taxes. From February 2024, a RZLT, levied at 3% on a site’s market value, will come into force. The tax, which will be collected by Revenue Commissioners, is based on what land county councils have zoned for housing. At the beginning of April, each local authority finalised registers of what sites would be impacted by the tax. Land owners can now appeal against the inclusion of their lands on the register to An Bord Pleanála. The deadline to lodge an appeal is May 1. Approx. 24,710 acres of serviced residential development land has been identified within the scope of the RZLT, which could yield more than €300m a year. The Business Post, 27th April
Sandyford, Dublin 18 Comer Group is proceeding with plans to build more than 500 apartments in Dublin’s Sandyford business district. The developer plans to build 428 new apartments, including amenities, at the Rockbrook property it purchased from Ires REIT in 2015 for between €13.9m and €15m. Comer is also considering repurposing the unfinished Sentinel office tower into a 102-apartment building. Comer received planning approval to build apartments at the Ires site in 2019, but construction work was delayed by the pandemic. Plans for an apartment complex advanced recently after Dún Laoghaire Rathdown County Council rezoned the area for residential development. React News, 26th April
Land Value Sharing (LVS) Tax CBRE research notes that while the original proposal to tax lands rezoned for residential development was widely deemed to be an accepted measure, the current proposals under the Draft Bill of imposing the LVS tax on existing residential zoned lands is certainly a concern for the market. While the proposed levy is being introduced to help promote residential development to assist in addressing the ongoing housing crisis, CBRE strongly believes that this will have the opposite effect, potentially leading to an increase in house prices, and causes further concern for all stakeholders, including funders, when reviewing and assessing residential development opportunities. CBRE Research, 28th April
Housing Package Thousands of one-off homes will escape council development levies and water connection charges as part of the government’s €1bn housing package. Darragh O’Brien, the Minister for Housing, has said that the aim of fee waiver for “schemes” of houses and apartments is to encourage building at a time of rising construction costs and interest rates. Uisce Eireann (formerly Irish Water) charges fees for one-off homes which are connecting to its water and wastewater networks. The 12-month waiver of development levies and Uisce Eireann connection fees will cost approx. €380m. The Business Post, 28th April
Affordable Housing Budget Local authorities failed to spend €151m of the affordable housing budget over the past two years, meaning that approx. 90% of the available funds have been left unspent. A total of €170m was allocated to the Affordable Housing Fund by the Department of Housing over the past two years. The fund is meant to be used by local authorities to deliver affordable housing in their areas. Other data released showed an additional €335.2m underspend over the past two years in funds typically used by local authorities to build and buy homes for social housing. The underspend represented 14% of the €2.3bn allocated to councils for housing. Last year, underspending was recorded by approved housing bodies, which are the main developers of new social housing in Ireland, with €86.3m of the €293.9m capital available not used. Another €19.1m of a €70m fund to help these organisations deliver cost-rental housing at below market rates is also unspent. The department’s total capital underspend on housing has been €912.2m across 2021 and 2022. The Business Post, 30th April
Richmond Road, North Dublin Dublin City Council has given the green light for a scaled back residential development for Richmond Road on a site close to the Tolka river. Earlier this year, Malkey Ltd lodged plans for a scheme up to 10 storeys high with 133 apartments on the site of the former Leydens Wholesalers & Distributors. The city council has granted planning permission for the scheme – but only after ordering the removal of the top two storeys of the proposed 10-storey block and reducing the nine-storey block to seven storeys. As a result, the number of apartments has been reduced from 133 units to 107, made up of 55 one-bed units and 57 two-bed apartments. The Irish Times, 26th April
OTHER
Weston Airport The operator of Weston airport has secured the green light for an upgrade in terminal facilities at the airport. Weston Aviation Academy Ltd has secured the go-ahead from South Dublin County Council after Stripe co-founder, John Collison, and a group of investors purchased a majority stake in the business. The airport site straddles the Dublin-Kildare border and lies to the west of Lucan and south of Leixlip. The Irish Independent, 27th April
IDA Ireland is spending hundreds of millions of euros buying and developing industrial sites outside Dublin for future job projects, as it battles the housing shortage and constraints on the national electricity grid. The rapid rise in property market interventions by the inward investment agency has led it to spend more money on real estate than direct job supports after deciding to amass “strategic” sites to address what it describes as “market failure” in regional locations. Such moves, designed to encourage multinational companies to move operations to Ireland, come amid concern about the shortage of housing for workers and pressure on power supplies that have led to curbs on the development of energy-hungry data centres. Internal files released under the Freedom of Information Act show the agency has acquired 16 large properties in the last two years, all part of an effort to deliver “advanced building solutions” in 19 sites by 2024. The Irish Times, 2nd May
BNPPRE Q1 2023 Irish Investment Market Report According to BNPPRE’s report €624.8m of income-producing property assets traded in Q1 2023. This was 18% down on Q1 2022, and the lowest Q1 turnover since 2019. Consistent with the pattern in leasing markets, the fall-off was entirely attributable to a reduction in the average deal size. The number of transactions actually rose marginally between Q1 2022 and Q1 2023. Ignoring the quarter’s three largest transactions, the average deal size was just under €11.6m. Rate increases have made debt service and interest cover ratios more binding, reducing the amount of debt capital available to finance larger property transactions. Higher rates are forcing property yields to adjust. Investors have increasingly been attracted to cheaper regions and sectors in search of value and stable income. To illustrate this regional swing, Dublin’s share of transactions, which has been trending down since Q3 2020, continued to fall from 70% to 64.5% over the last 12 months. Finally, international investors have been less active in closing deals over the opening months of this year. BNPPRE Report, 2nd May
Mortgage Activity According to data from the Banking & Payments Federation Ireland (BPFI), remortgaging and mortgage switching activity fell 54.4% YoY in March, likely due to rising interest rates. Meanwhile, demand for mortgage drawdowns remained strong, with 10,908 new mortgages valued at €2.9bn drawn down by borrowers in Q1 2023. Mortgage approval volumes in March fell by 1.2% YoY but were up 33.8% compared to February, with first-time buyers accounting for 62% of approved mortgages, the highest share since the data was first published in July 2014. Separately, mortgage drawdown figures showed that new borrowing increased 10.1% in volume and 14.1% in value in Q1 2023 compared to the same period last year. The Irish Times, 28th April
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