4th May (Issue 295)
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
Douglas, Cork A redeveloped Cork suburban ‘street’ has come up for sale with rental income of €761k and a price tag of €9.5m. East Douglas Village, a highly successful mixed-use development completed in 2000, comprises five buildings. It includes a bar/restaurant with 10-bedroom hotel, 16 apartments, three restaurants, plus offices and retail accommodation, all close to 100% occupancy. The development adjoins Aldi, which is set to open in the coming weeks, and a busy McDonald’s, with a new road opened to serve the latest supermarket arrival. The development is fully occupied save for one 300 sq. ft unit which is currently available. The residential section of the income from the 16 two-bed apartments, described as large, is €186,564 per annum, which is an average of €11,500 pa per unit or under €1,000 per month. The commercial income is €574,860 pa, with a WAULT of 8.42 years.
According to Lisney’s Margaret Kelleher, the currently income of €761,424 pa has further potential uplift in income from the apartments, which could rise to €199,000 pa when RPZ increases are implemented, and from the car park.
The Irish Examiner, 29th April
If you are interested in purchasing this asset and require financing, please contact Origin Capital as we can arrange senior debt facilities of up to €7m for the purchase of this asset.
RETAIL
Retail Values The decline in the value of prime Irish retail properties slowed in the first quarter of this year but falls are expected to continue until early 2022. According to the latest MSCI/SCSI index, capital values across the board declined by a further 0.7% in the first quarter bringing the fall in overall values to 6.1% over 12 months. Goodbody real estate analyst Colm Lauder said he expects further rental declines which could keep capital values in negative territory for 2021. Despite the fall in values positive income returns of 1.3% kept total returns positive at 0.6%. Capital values fell by a further 3.2% on Grafton Street in the first quarter, by 4.7% on Henry Street and by 2pc for shopping centres. Consequently, Grafton Street values have fallen 26% since Covid struck while Henry Street values fell an even sharper 30.3% over the 12 months. Shopping centres, due to their grocery, suburban locations, parking and other advantages, fared better with an average 18.6% fall over 12 months. Irish Independent, 29th April
Lidl, Dublin Lidl has been granted planning permission by An Bord Pleanála for a €5.5 million redevelopment of the largely vacant Talbot Mall premises in Dublin’s north inner city. The new store on Talbot Street will take over the entirety of the centre, create 35 new permanent jobs and will support up to 100 jobs during the development and construction phases. Around three-quarters of the units in Talbot Mall have become vacant in recent years following the closure of many shops, including a florist, shoe shop, bag shop, hairdressers and travel agent. Lidl said the €5.5 million investment is the first part of an overall €30 million investment the supermarket has planned for Dublin city centre in the coming years. The German retailer has just lodged a planning application to build a new store and accompanying retail units at Ballybough to the north of the centre, which is likely to involve an investment in the region of €12 million. The Business Post, 2nd May
Sports Direct, Galway Sports Direct, the sportswear chain led by Mike Ashley, has signed a lease on the former Debenhams store in Galway. Ashley made a failed bid for Debenhams after the department store chain collapsed last year. Sports Direct has c60 stores in Ireland but this will be its first in Galway. The premises is located on the Eyre Street side of the Corrib shopping centre, which has a Marks & Spencer outlet. In February the retailer announced a €2 million, five-year sponsorship deal with Cork GAA and said it planned to increase its sponsorship of grassroots Gaelic sport from five to 11 clubs nationwide. The Sunday Times, 2nd May
HOTEL
Vienna Woods, Cork A Cork hotel is planning a major €6m expansion, including almost doubling its bedrooms. The Vienna Woods Country House Hotel, which has already undergone a €5m upgrade since 2006, has lodged a planning application with Cork City Council to add 42 additional bedrooms to the existing 45. Michael Magner, who owns the hotel with his father-in-law Brian Scully, is also planning to add a spa, to include an infinity pool, steam room, sauna, seven treatment rooms and seaweed baths, as well as a 25-seat cinema, a virtual golf facility and a cardio workout/gym area. Mr Magner said the new project is “dependent on planning, and, most importantly, when recovery returns”. He said once up and running, the project will create 50 new jobs and add €1.8m to the local economy in wages and salaries “not including the extra spend from visitors to the area and increased purchases from suppliers”. Vienna Woods Country House Hotel, on 22 acres of woodland in Glanmire, is a 15-minute drive from Cork city. The Irish Examiner, 28th April
OFFICE
City Gate, Cork Irish Life Investment Managers (ILIM) has retained agent Cushman & Wakefield to secure an occupier for 50,000 sq. ft of Grade A office space at City Gate Park in Mahon, Co Cork. The accommodation, which comes to the letting market fully-fitted, had been occupied up until recently by technology giant Dell EMC. The company vacated the first and second floors in Block 1, City Gate Park, as part of its plan to bring more of its workforce together at its campus in the nearby town of Ovens. The accommodation freed up by Dell EMC’s move extends to 50,991sq ft (4,737sq m) in total, and is being made available to let in one lot or sub-divided, as required. The offices form part of the wider City Gate Park scheme built originally by John Cleary in 2012. The development has an overall capacity of 27,870sq m (300,000sq ft), and more than 500 car-parking spaces. The Irish Times, 28th April
RESIDENTIAL / LAND
Project Haven The prospect of immediate rental income copper-fastened by the security of a 25-year government lease is expected to see strong interest from investors in the sale of Project Haven, a portfolio of approximately 60 social housing units across Dublin’s north, south and west suburbs. The portfolio is producing a guaranteed gross rental income of €952,000 per annum and is being offered to the market by agent CBRE on behalf of Allied Irish Property and the Topland Group at a guide price of €21 million. Each property within the portfolio has been fully refurbished and let by way of a standard lease for a term of 25 years, directly to the relevant local authority in each area. Index-linked rent reviews are provided for in every third year. Shane Cahir of CBRE says he expects the Project Haven portfolio to appeal to a wide range of domestic and international investors given the in-place income, reduced operational costs and secure 25-year government lease structure. The Irish Times, 28th April
If you are interested in purchasing this asset and require financing, please contact Origin Capital as we can arrange senior debt facilities of up to €14m for the purchase of this asset.
Citywest, Dublin Developers and investors involved in the delivery of residential accommodation in the Dublin market will be interested in the sale of a ready-to-go greenfield site at Citywest. Extending to a total area of 3.76 hectares (9.3 acres), the property – known as Mountview – is being offered to the market on behalf of Davy Hickey Properties at a guide price of €8.5 million. The subject site comes for sale with full planning permission for the construction of a 110-unit residential scheme. The existing permission comprises a mixture of 90 housing units and 20 apartments with the added benefit of no Part V requirement which has been satisfied elsewhere. The selling agents, Cushman & Wakefield, say the prospective purchaser may look to the possibility of increasing the density of development. The site is well-located within the context of the wider Citywest area. The lands are situated directly north of the Fortunestown Luas red line stop, adjacent to the Citywest Village new homes scheme and in close proximity to both Citywest Shopping Centre and the Citywest Business Campus. The site is also located directly north of a new neighbourhood park which is currently under construction. The Irish Times, 28th April
James Place East, Dublin 2 A new site in Dublin 2 has come to the market, located between Baggot Street Lower and Mount Street Upper, No 37-42 James Place East currently comprises office and mews buildings totalling 1,142sq m (12,291sq ft) which were fully refurbished in 2017, along with a secure nine-space surface car park. The property is being offered to the market by JLL, on behalf of French Investor Amundi at a guide price of €7.5 million. The overall site extends to approx 0.155 hectares (0.385 acres) and has 45m (147.6ft) frontage on to James Place East. The subject property is zoned Z6 under the Dublin City Development Plan 2016-2022, to provide for the “creation and protection of enterprise and facilities opportunities for employment creation”. An initial feasibility study, prepared in advance of the sale by architects Scott Tallon Walker, suggests the site could accommodate a new office building or other uses subject to planning permission. Should the buyer decide to pursue the development of offices, the study outlines the site’s capacity for a 40,000sq ft building together with secure underground car parking and a range of tenant amenity facilities. The Irish Times, 28th April
Knocklyon, South Dublin Vincent Finnegan Commercial is offering two residential development sites in Knocklyon in south Dublin for sale in one lot with a €2m asking price, down from the €2.75m which had been guided earlier this year. South Dublin County Council is the vendor of the sites which are located at Castlefield Avenue and Old Knocklyon Avenue, Dublin 16. Extending to 0.986 acres and 0.949 acres, the sites are separated by Old Knocklyon Road which ends at the site and could be integrated as the access road into any new development. As the zoning is RES “to protect and/or improve residential amenity”, this facilitates its residential potential. In addition, some commercial development could be considered under this zoning. Small sections of both sites closest to the M50 are subject to wayleave allowing the state agency Irish Water to access these areas which could be designed as part of the open space for any planning application. Irish Independent, 29th April
Maynooth, Kildare A global property investment firm with a €1 billion war chest has pushed out first-time buyers by purchasing most of a 170-home estate in the commuter belt. The developers of the Mullen Park estate in Maynooth in Co Kildare had been marketing new homes on the estate to private buyers since last year, with around 35 sold so far. Round Hill Capital has now agreed to buy up to 135 three and four-bed homes on the estate so that they can be put on the rental market. The homes were on sale for around €400,000, meaning that the value of the deal could be c.€54 million. Round Hill Capital was involved in a €123 million purchase of 297 apartments in Northwood in north Dublin last November with another investment firm. Last week, the company announced that it had bought 112 family homes to rent in Bay Meadows in Hollystown in Dublin 15 in partnership with another firm, SFO Capital Partners. The Business Post, 2nd May
Pearse St, Dublin 2 The Department of Housing has given approval for the regeneration of the Pearse House flat complex in Dublin, as it continues discussions with Dublin City Council (DCC) on a capital plan for the regeneration of over 6,000 other flats in the city. The department and the council are attempting to finalise a ten-year capital plan for 99 flat complexes which between them contain over 6,000 homes. The final bill could be in excess of €2 billion. The department is considering proposals for funding the wider regeneration of Dublin’s flat complexes under various social housing programmes. It said it was “supportive of DCC’s ambitious plan”, but added that the plan would be “subject to funding availability and the procedures and requirements of the public spending code”. Darach O’Connor, senior executive officer with DCC, said the regeneration programme had the potential to be the largest such programme in the history of the state. “Over 6,000 apartments were built more than 40 years ago and are in need of urgent regeneration. A strategic capital plan for the next ten years is required to implement this regeneration programme,” he said. The Business Post, 2nd May
Mortgage Approvals Mortgage drawdowns for house purchase grew by 5% yoy in Q1 despite the country being in lockdown throughout the period. This is in stark contrast to the -37% yoy decline seen at the start of the pandemic (Q2 2020), providing evidence that demand continues to be robust and credit conditions relatively loose. The data can be divided into different categories, but the most notable trend is the growth in mortgages drawn-down on existing homes, which grew by 13% yoy in Q1. Double-digit growth was seen for both first-time buyers (FTB) and mover-purchasers of existing homes. Although the data is not broken down geographically, separate transaction data show markets outside Dublin are witnessing higher transaction growth rates, possibly reflecting evidence of the Work-from-Home (WFH) effect. In contrast, mortgage drawdowns for new homes fell by 14% yoy in Q1. Mortgage approvals data for March were also published suggests that demand remains high. Approvals for house purchase grew by 14% yoy in March, but we are now entering into rather easy comparatives. Relative to March 2019, approvals for house purchase were still up 4% yoy. For Q1 overall, mortgage approvals grew by 8% yoy, with approvals for FTBs up by 12% but approvals for movers up only 1% yoy. Having fallen by 30% in the past twelve months, the record low stock for sale is likely to impact on incentives to move and, indeed, continues to have inflationary impacts. Goodbody’s expect gross mortgage lending to grow to €10bn in 2021, surpassing the 2019 level of €9.5bn. This includes growth in the re-mortgaging segment, which resumed an upward trajectory in Q1. House prices are expected to grow by 5% in 2021, led by the existing homes market. A meaningful increase in housing output is required over the coming years to free up stock and increase liquidity in the market from their current historically low levels. The early evidence suggests that locational preferences have shifted as to where these homes may be required. Goodbody’s, Irish Mortgage Market
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