4th July (Issue 404)
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.
OFFICE
Britain Quay, Dublin City Centre The German investor MEAG is understood to be closing in on the purchase for approx. €50m of a prime office investment in Dublin’s south docklands from Hibernia Real Estate Group. The company, which acts as asset manager for the Munich RE Group and ERGO with approx. €310bn in AUM, is said by sources to have agreed heads of terms for Central Quay, a 59,861 sq. ft six-storey over-basement office building on Britain Quay. The subject property has undergone a significant programme of refurbishment since being acquired by the then Hibernia Reit for €51.3m in 2016. Approx. €3.4m is now being generated from a diverse mix of occupiers. This figure includes a fit-out rent of €250k pa (first floor until April 2028) and a proposed 12-month rental underwrite for the second floor, which is vacant currently. The current tenant line-up includes DAE (Dubai Aerospace Enterprise), Hines, global investment manager Millennium Operations Limited, international law firm Fragomen, and leading insurance provider Europ Assistance. The WAULT is just under six years and MEAG stands to secure a yield of approx. 6.25% on its investment. The Irish Times, 28th June
STUDENT ACCOMMODATION
Monkstown, South Dublin Located on Abbey Road, Ballintle Court in Monkstown comprises a purpose-built student accommodation (PBSA) facility constructed in the 1990s. Guiding at a price of €2m through Colliers, the property, which is being sold with the benefit of full vacant possession, consists of two buildings on a secure 0.2-acre site. Each building has four units with three en suite bedrooms and a kitchen/living area. The units include 21 single bedrooms and three double bedrooms, giving a total of 27 bedspaces. The Irish Times, 28th June
HOSPITALITY
Fáilte Ireland has dramatically revised downwards the level of beds occupied by refugees and asylum seekers in hotels and other accommodation providers registered with the tourism body. The move follows an examination by Fáilte Ireland of data put together by the Department of Integration in April, which estimated that 28% of all beds registered with the tourism body was contracted to the State. The new estimate is that 13% of all tourism bed stock in premises that are registered with Fáilte Ireland is contracted out to the State. The overestimate is understood to have been caused by modelling which assumed that all accommodation stock was registered to Fáilte Ireland. Fáilte Ireland also revised how it estimates the impact on the tourism sector economically. Previously, this had been measured at approx. €1.1bn. However, the updated assessment from Fáilte Ireland says this is now estimated as a range, between €700m and €1.1bn. The new findings do not revise the absolute numbers of people accommodated in Ireland, with 76,143 beds under contract, and 29,555 in Fáilte Ireland properties. The Irish Times, 1st July
Camden Street, Dublin 8 JD Wetherspoon’s pub and hotel on Dublin’s Camden Street is facing an uphill battle to reopen a beer garden after objections from local residents about anti-social behaviour. The British pub chain, which opened the Keavan’s Port hotel and pub after a redevelopment two years ago, is also in the spotlight of Dublin City Council (DCC), which has served two enforcement notices on it for breach of planning. JD Wetherspoon closed its beer garden temporarily in April last year after DCC issued an enforcement notice and there was legal correspondence from local people. A new planning application to erect a 13-metre-high “acoustic sound barrier” wall is being seen as a move to reopen the garden and is being met with stiff opposition. The Irish Independent, 29th June
MIXED-USE
Online Auctions A variety of commercial and investment properties will be auctioned by BidX1. The most valuable of them is the Bull Ring mixed-use building at 67-70 Meath Street, Dublin 8, in Dublin’s Liberties, which has had its guide price reduced to €1.8m. Two tenants occupy the ground floor and another tenant has a first-floor office, bringing the total current rent reserved to €135k pa (NIY 6.8%). In 2017 the Bull Ring went for private treaty sale with a €3.75m guide price, and the following year BidX1 offered it for auction with a €3.3m guide price. Then last year it was again offered in a private treaty sale for €2.6m. The Business Post, 1st July
RESIDENTIAL / DEVELOPMENT
Ringsend, Dublin 4 The National Asset Management Agency (Nama) has sold its remaining 20% stake in the former Irish Glass Bottle site to a consortium led by developer Johnny Ronan. The agency’s shareholding is being acquired by Pembroke Ventures DAC, the majority 80% shareholder of the lands at Poolbeg in Dublin 4. Pembroke has now taken 100% ownership of the project and will oversee completion of the transformation of the Poolbeg West Strategic Development Zone, Nama said in a statement. The Business Post, 30th June
Cost Rental Housing Darragh O’Brien, the Minister for Housing, has promised that the state will “ramp up” the delivery of cost rental housing using low interest rate finance. Cost rental prices have to be at least 25% below market for non-social housing tenants and are a key part of the state’s strategy to make housing more affordable for “generation rent.” O’Brien was speaking at the launch of the annual report of the Housing Finance Agency, the semi-state body which lent out approx. €1.2bn to councils and affordable housing bodies. This funding helped to deliver a total of 3,353 homes last year, including 2889 social homes and 464 cost rental homes. The Business Post, 28th June
Rent in Ireland Rents for new tenancies rose by 7.6% on an annualised basis in the final quarter of 2022, new data from the RTB has shown. The national standardised average rent in Ireland was €1,507 in the fourth quarter of 2022. The figure is based on rents charged in 15,868 new tenancy registrations. Between the third and fourth quarter of last year, rents rose by 2%. Rents for new tenancies were highest in Dublin, with the average new tenancy costing €2,063 per month, up 6.9% in the year. The Business Post, 28th June
Presentation Road, Galway The sale of the former Presentation Convent site in Galway City is expected to see interest from a mix of developers, investors and potential occupiers. The subject property, which is being marketed as a redevelopment and refurbishment opportunity, is being offered to the market by agent Avison Young at a guide price of €2.5m. Located on Presentation Road and just a short walk from Eyre Square, Shop Street and Spanish Arch in the centre of the city, the 1.32-acre site comprises several substantial properties including the period Presentation Convent building (25 bedrooms), together with the former Our Lady’s College secondary school and Presentation national school, extending to a total area of 41,210 sq. ft. The Irish Times, 28th June
Kildare Town, Co Kildare A developer has succeeded in its High Court challenge to An Bord Pleanála’s refusal of planning permission for a 64-home scheme in Co Kildare. Ms. Justice Siobhán Phelan proposed making an order overturning the planning board’s decision to reject Keshmore Homes Ltd’s planning application for housing at a site in Kildare town. The Irish Times, 30th June
Dolphin’s Barn, Dublin 8 The construction of more than 540 social and cost-rental apartments at the site of the St Teresa’s Gardens flat complex in Dolphin’s Barn, Dublin 8, including a 15-storey block, has been granted permission by An Bord Pleanála. Three years ago, the LDA announced it was taking on the redevelopment of St Teresa’s Gardens, 15 years after Dublin City Council proposed to redevelop the dilapidated 1950s flat complex. Initially the LDA intended to build 700 apartments on the site in blocks up to 22-storeys tall, but it scaled back these plans following local and political opposition, eventually making an application in December of last year for 543 homes, of which just under 500 will be one- and two-bedroom apartments in blocks up to 15-storeys tall. Just over 70% of the apartments will be cost-rental homes. The rest of the apartments will be allocated to tenants on the city council’s social housing waiting list. Most of the apartments, 274, will have two bedrooms, with 225 one-bedroom apartments and 44 three-bedroom apartments. The site, located off Donore Avenue, covers an area of 4.3 acres. The Irish Times, 29th June
Clongriffin, North Dublin The State-owned LDA has struck a deal to pay more than €40m to “bad bank” Nama to advance plans for as many as 2,500 “affordable” homes in north Co Dublin. The development at Clongriffin will be the biggest single State housing project in decades, with building costs approx. €1.2bn. The aim is to provide “cost-rental” apartments with rents typically set 30% below market rates, although the LDA will not be on site for another year and must go to public tender for the building work. The deal will see the LDA buy a 24.7-acre property that was long under the control of developer Gerry Gannon, a Nama client who tried to sell the land two years ago. The agency will also buy lands surrounded by the Gannon properties that were controlled by another Nama client, Barina Construction, which is in receivership. The Gannon site has planning permission for 1,823 homes and a 209-bedroom hotel, in a stalled development known as Project Capital North. The 15-block project includes permission for more than 236,805 sq. ft of commercial space. The LDA believes there is potential for another 700 homes on the former Barina property. The Irish Times, 3rd July
Coolock, Co Dublin Approx. €104m in Government funding to build 853 new social and affordable homes at Oscar Traynor Road in Coolock, Dublin has been approved. The long-awaited scheme comprising of social housing homes (40%), cost rental homes (40%) and affordable purchase homes (20%) is a collaboration between Dublin City Council, Clúid Housing and the Department of Housing. The developer is Glenveagh. The scheme will include 240 houses and 613 apartments and duplex units up to six storeys tall. The total cost of the scheme is estimated at €357m. The Irish Times, 28th June
Jamestown Business Park, Dublin 11 Plans for the regeneration of 106 acres of industrial lands to the north of Finglas village to provide homes for up to 8,000 people have been approved by Dublin city councillors. The Jamestown Masterplan will govern the redevelopment of Jamestown Business Park and surrounding lands, to the east of the planned Finglas Luas line, with the potential for 3,500-3,800 homes, a primary school and employment, cultural and community facilities. Overall, the lands have been planned out with a ratio of 65% residential and 25% employment or commercial development, with the remainder to be used for community, education and ancillary facilities. The Irish Times, 3rd July
Housing Market Approx. 6,000 tenancies were lost in the rental market in the first six months of 2023, according to data from Sherry FitzGerald. House price growth, meanwhile, continues to slow in the face of higher borrowing costs. In its latest quarterly report on the Irish property market, the State’s largest real estate agent estimated that the price of a second-hand home in the Republic rose by 3.4% in the 12 months to June, down from a rate of approx. 10% this time last year. The official property price register, which is based on actual transactions, put the annual rate of inflation for all property types at 3.6% in April. Sales volumes continued to exceed pre-pandemic levels with 12,500 housing transactions recorded in the first quarter, as per the property price register. This represents a 2% increase compared to the same quarter in 2022 and an 11.3% increase compared to the opening quarter of 2020. The new homes market displayed continued growth in transaction activity during the first three months of 2023, recording an 11.3% increase. In the first six months of the year 35% of vendors were investors selling their properties. This would suggest a net loss of approx. 6,000 tenancies from the rental market in the first six months of 2023. The Irish Times, 4th July
Celbridge, Co Kildare Two companies owned by Steven Dunne are unable currently to pay their debts, a judge was told. Barrister Ross Gorman told Judge John O’Connor in the Circuit Civil Court that Mr. Dunne was seeking the appointment of an interim examiner to property development and construction company Aterna Developments and related firm Aterna Lee on the application of the latter company. The judge appointed Interpath Advisory Dublin, as interim examiner to both companies. The main project undertaken by Aterna Developments was a Celbridge development of 75 houses and apartments to provide critically needed social housing for Kildare County Council, which would lease the completed homes. The Celbridge project had been split into two phases, firstly the building of 29 houses and then the build of another 22 houses with 24 apartments and duplexes. Blacklough Construction had been appointed to complete the works but was placed into liquidation earlier this year. Kildare County Council received approval from the Department of Housing to enter long-term leases for the 75 units. The Irish Times, 3rd July
Cairn Homes Results Ireland’s largest housebuilder recorded a strong performance in the first half of the year, while “persistent” inflation showed some signs of moderating. Cairn Homes generated core revenue of €215m in the first six months of the year, down from €240m reported in the same period in 2022. The company also closed 535 new homes sales. This was slightly below the 547 new home sales recorded in the first half of 2022. Over 1,100 new home sales were agreed in the six-month period, while the current closed and forward sales pipeline has grown to 2,230 new homes with a net sales value of over €800m. Sales pricing levels were flat in the period despite inflationary pressures, although Cairn pointed to a moderation in build cost inflation. However, despite this slowdown, the housebuilder anticipates the impact of inflation to add approx. €10k to the cost of each unit this year. The Irish Independent, 4th July
OTHER
Draft CRE figures for Q2 2023 have been released and show a decrease in overall spend from the previous quarter and the 10-year average. The total volume of transactions in Q2 equated to approx. €200m – a 68% decrease from Q1. However, the number of transactions was in line with Q1 at 22 for the quarter compared to 26 in Q1, indicating investors are still active but at smaller lot sizes. In terms of active sectors for the quarter there has been a relatively even split between the traditional sectors with retail being the most dominant at 32% (clocking five deals), industrial at 24% (also with five major deals), office at 21% (with three major deals) and PRS, which historically has been the most active sector in recent years, at 19% (registering four major deals). The Business Post, 1st July
University College Cork (UCC) has secured €50m in financing from the European Investment Bank (EIB) to build a new business school. Located on South Terrace in the city centre, planning permission for UCC’s new school was granted by Cork City Council in May. UCC said the development will provide an economic boost to the area by bringing over 4,500 students and 225 staff into the city centre every day. It is anticipated that construction of the new building will begin in May 2024. In addition to the EIB loan, the €115m project will be financed via exchequer support and a €25m Higher Education Strategic Infrastructure Fund award. The Business Post, 30th June
Dublin Airport With less than one month to go before agent JLL calls for bids, according to market sources several potential purchasers including a US-headquartered logistics and airport developer and a sovereign wealth fund from Abu Dhabi have expressed their interest in the 260 acres of land currently for sale next to Dublin Airport. Although it remains to be seen if any of these parties makes a bid for the lands which are owned by brothers and aviation entrepreneurs Ulick and Des McEvaddy, along with other owners Seán Fox and Brendan and Orla O’Donoghue, their interest will likely serve to further concentrate the minds at DAA as it weighs up its own offer. The Irish Times, 28th June
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