31st January (Issue 382)

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.



Donnybrook, Dublin 4 A consortium of private investors based in the west of Ireland has paid c. €6.5m for the Donnybrook Mall in Dublin 4. Acquired by developer Sean Dunne for €17m at the height of the last boom, the mall last changed hands in 2014, with its outgoing owner, an individual private Irish investor, paying €6.6m to secure ownership of the 15,590 sq. ft property. On this occasion the scheme was offered to the market by Lisney last September at a guide price of €6.8m. The buyers are believed to have secured the property in the face of competition from a number of parties. The mall’s new owners will have the benefit of immediate rental income of €450.3k pa from a tenant line-up which includes Tesco, Lloyds Pharmacy and Abrakebabra. The Irish Times, 25th January

Greystones, Co Wicklow The Meridian Point retail scheme and its 180-space car park are being offered to the market on behalf of the Cosgrave Property Group by agent Avison Young at a guide price of €5.5m (NIY 9.64%). The development comes fully occupied with a strong tenant line-up which includes Sports Direct and Costa Coffee. Meridian Point comprises 20 tenancies in total made up of a mix of uses. The net rent receivable is €582.8k pa with a WAULT of 7.05 years to lease expiry and 5.24 years to lease break. The Irish Times, 25th January



Botanic Avenue, Dublin 9 A property agency that charges students €720 a month to share a room with three other people has been refused permission to expand one of its Dublin developments. The Hazelwood Student Village on Botanic Avenue in Dublin 9 is an amalgamation of two homes that have been renovated to create 28 student bedspaces across 13 rooms. The rent for a bedspace in a room with four single beds is €720 a month. In another room with two double beds, each tenant is charged €1,040 a month per bed. Last year, Hazelwood Walk Holdings Limited applied for permission to expand the Botanic Avenue development and create two new rooms for beds. The two properties on Botanic Avenue were acquired for €1.8m in 2021. Based on rents being charged for bedspaces in Botanic Avenue, the landlords could expect to earn €294k (c.16% yield) in rent each year from the property. The Business Post, 25th January



M7 Real Estate Amsterdam-based investor M7 Real Estate has completed the acquisition of a portfolio of office and industrial assets in the Netherlands and Ireland for €160m. The deal was made on behalf of the firm’s sixth value-add European investment fund, M7 European Estate Investment Partners VI (M7 EREIP VI), which is now fully invested. The portfolio consists of 20 assets totalling 1.5m sq. ft split between 667.3k sq. ft of industrial properties and 785.7k sq. ft of offices in Dublin, Den Bosch, Eindhoven, Groningen and Rotterdam. React News, 24th January

Mulhuddart, Dublin 15 Amazon has lodged plans for three new data centres at its data centre campus to the north of Mulhuddart in north Dublin. This would bring to six the total number of data centres on the site. An Environmental Impact Statement lodged with the new plan stated that permitted development and future indicative development at the data campus will consume 219.7MW in power and produce 607.5k tonnes of CO2 per year. The Irish Times, 25th January



Earlsfort Terrace, Dublin 2 US-headquartered investor KKR is closing in on a deal to rent just under 50,000 sq. ft of office space at Intercom’s new headquarters on Dublin’s Earlsfort Terrace. Although heads of terms have yet to be agreed between the parties, according to market sources, KKR is intent on occupying the top three floors of the newly-developed Cadenza building. Should the deal proceed Intercom will assign part of its lease with the building’s owner, Irish Life, to the global investment firm. Intercom agreed to pre-let the entire building (110,868 sq. ft) on an 18-year lease prior to the arrival of Covid-19 in December 2019. The Irish Times, 25th January

Harcourt Street, Dublin 2 Hibernia Real Estate Group has commenced the “soft strip” element (removal of the internal fit out and all services) in preparation for the demolition of the former Garda Dublin regional headquarters at Harcourt Square. The demolition, which is expected to get under way by the end of February, will clear the way for the developer to deliver a new headquarter office for KPMG. John Paul Construction has been appointed as the main contractor for the project and is now established on site. The new office complex, which is scheduled for completion in February 2026, will be capable of accommodating more than 3k of KPMG’s Dublin-based workforce. The Irish Times, 25th January

St Stephens Green, Dublin 2 An Bord Pleanála has given permission to US property giant Kennedy Wilson to construct a new office campus at St Stephen’s Green in Dublin that will have the capacity to accommodate 3k office workers. The site at Stokes Place at St Stephen’s Green South and Harcourt Street currently accommodates the Dublin headquarters of KPMG and the new proposal involves the demolition of the existing office complex and the construction of an eight-storey office block. Plans were first lodged for the scheme in January 2021 and Dublin City Council approved them in September that year despite local opposition. In allowing the project, the council ordered the omission of one of its floors due to visual impact concerns. The Irish Times, 25th January



Residential Zoned Land Tax As part of the government’s flagship Housing for All policy, the Residential Zoned Land Tax, levied at 3 per cent on a site’s market value, will come into force next year. Approximately 10,000 hectares of serviced residential development land has been identified within the scope of the tax, which could yield more than €300 million a year.
The tax is designed to counter “hoarding and speculative behaviour” in the Irish property market, which has been highlighted by government research. The tax will come into effect in February 2024, with owners of land on the register charged 3 per cent based on the market value of each site. The state is preparing a register that will identify the landowners who will be subject to the tax.
Across more than 100 documents sent to local authorities last month, housebuilders and landowners claimed the new tax will exacerbate affordability issues in the Irish housing market and make more sites unviable to build on. Conor O’Connell, Director of housing and planning at the Construction Industry Federation, told the Business Post the organisation welcomed the principles of the tax, but said the unintended consequences of the measure needed to be acknowledged by government. The Business Post, 29th January

Kentstown, Co Meath Knight Frank is seeking offers in excess of €3.5m for a greenfield site with planning permission for 86 houses (c€41k per site) in Kentstown, Co Meath. Extending across a total area of 8.87 acres, the lands come for sale with full approval from Meath County Council for the construction of a new-homes scheme to be delivered in two phases. Phase one comprises 38 houses while phase two comprises 48 houses and a creche. The houses comprise a mix of four two-beds, 64 three-beds and 18 four-bedroom units. The Irish Times, 25th January

Newbridge, Co Kildare Developers and investors involved in the delivery of new homes in Dublin’s commuter belt counties will be interested in the opportunity presented by the sale of a 8.81-acre greenfield site at Old Connell in Newbridge, Co Kildare. The site, which has potential to accommodate 126 homes, is being offered to the market by agent Avison Young on behalf of the Dominican Order at a guide price of €5m (€568k per acre). The Irish Times, 25th January

Blackrock, South Co Dublin Bartra property group has secured €4.15m from the off-market disposal of a prime residential development site at Woodlands Park in the south Dublin suburb of Blackrock. Located off Mount Merrion Avenue, the 0.72-acre site, which has full planning permission for 26 apartments (c€160k per site), has been acquired by Red Rock Developments. While the house was not publicly advertised for sale, an examination of the Property Price Register shows that Bartra paid €4m for it in 2018. The scheme also provides for 26 surface car-parking spaces. Having secured approval for this development, Bartra subsequently sought permission for a revised scheme comprising 38 build-to-rent apartments aimed towards the “later living” or retirees’ market. While this proposal received the green light from Dún Laoghaire-Rathdown County Council last October, it remains the subject of an appeal to An Bord Pleanála by local residents. The Irish Times, 25th January

Drumcondra, Dublin 9 Construction of 1,592 apartments in Drumcondra in Dublin has been blocked by the High Court due to flaws found in its planning permission. Permission for the €602m build-to-rent scheme, comprising studios, one-beds, two-beds and three-beds, was granted in November 2021 to the Irish arm of US real estate giant Hines.
The 12 apartment blocks, ranging in height from two to 18 storeys, was to be built on the site of the former Holy Cross seminary, on Clonliffe Road. Ruling on her judicial review action today, Mr Justice Richard Humphreys said An Bord Pleanála failed to follow the required approach to assessing a development’s impact on a protected structure. The Irish Times, 27th January

Housing Targets Unpublished research by the Housing Commission says Ireland may need up to 62k homes built per year until 2050 to meet demand – c. double the annual target in the Government’s master plan for this decade. The research, which was shared with Minister for Housing Darragh O’Brien in November last year, indicates that Ireland requires between 42k and 62k new homes every year – under Mr O’Brien’s Housing for All strategy, 33k is the average annual target in the period to 2030. With population growth consistently at the upper end of official projections due to higher migration, it finds that since 2017, migration has been more than 10% above the high-migration scenario – even excluding recent arrivals from Ukraine. Population alone, the Minister was told, is likely to drive the baseline requirement for houses to between 35k and 40k pa. Obsolescence in the housing stock built before 2022 suggests a further requirement of 7k-17k homes pa. The Irish Times, 26th January

Housing Completions 2022 Figures from the CSO show new dwelling completions totalled c. 30k in 2022, an increase of 45% on the previous year. This was the highest level of residential construction seen in the State since the Celtic Tiger era and was significantly ahead of the Government’s Housing for All target of 24.6k units for 2022. New home completions in the final quarter of last year totalled c.9.1k, a rise of over 31% on the same period in 2021. The full-year total was boosted by a major increase in apartment completions, which rose by 79% to c. 9.1k. There was c. 15.1k scheme dwelling completions in 2022, up 42% from 2021, while 5.5k single dwellings were completed, a rise of c. 17%. Just over 50 per cent of the completions last year were scheme dwellings, a further 30.7% were apartments and 18.5% were single dwellings. A geographical breakdown of the figures shows c. 60% of completions in 2022 were in Dublin or the Mid-East (Kildare, Louth, Meath, and Wicklow). The Government’s projected target for 2023 is 29,000. The Irish Times, 25th January



JLL Irish Property Index, which JLL has undertaken since 1969, measures returns on direct investment in property and represents a typical institutional investment portfolio. The portfolio, worth approximately €720m, is weighted 56% Offices, 17% Retail, 13% Industrial, and 14% Residential. The JLL Irish Property Index Overall Returns decreased by -3.1% during the quarter. This is the second consecutive quarter to record negative returns. The last time two consecutive quarters had negative returns in 2011. Capital values declined by -4.4% quarter-on-quarter (q-o-q) and decreased by -4.4% year-on-year (y-o-y).
Three of the four sectors had falling annual capital values, with industrial being the only sector showing growth by +1.5% yoy. Office capital values fell by -6.7%, the sector’s first yearend annual decline since 2012. This was a result of outward yield movement. Retail’s capital values fell by -4.3% making it the fourth consecutive year for the sector to have annual declines. Finally, residential’s capital values fell by -0.5%, the first annual decline for the sector since it was added to the index in 2019, again due to a marginal yield increase. JLL Q4 2022 Property Index Report

Commercial Real Estate Sector Pipeline More than 45k homes are stuck in the planning system, according to a report by construction consultants Mitchell McDermott. A further 28k have approval but no work has yet begun on building any of them. The figures account for close to three years’ worth of the Government target for residential construction across the State. The Mitchell McDermott figures suggest 28k homes were built last year, of which one-third were apartments. The report finds that the construction costs of a two-bed mid-range apartment rose by 9.6% last year. Mitchell McDermott found that the hard costs of building a two-bed, medium rise suburban apartment is now over €240k. Once other costs such as the provision of parking, siteworks, VAT and profit margin are included, the average cost of a suburban mid-rise two-bed apartment is €460k. For the construction industry, costs jumped 12% in 2022. The Irish Times, 26th January


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