6th December (Issue 376)

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.



Cabra, Dublin 7 Knight Frank is inviting proposals for the three remaining retail opportunities at Hamilton Gardens, the new residential scheme delivered by UK-headquartered property investor and developer, Royalton, in Cabra, Dublin 7. Expressions of interest are being sought particularly for an artisan cafe, a pharmacy, and a hair/nail/beauty salon operator for the scheme. Aimed towards the upper end of the PRS, Hamilton Gardens comprises 485 one-, two- and three-bedroom concierge-serviced apartments with a range of on-site amenities. The Irish Times, 30th November

Duke Street, Dublin 2 British luxury handbag maker Mulberry has signed a lease with Hines to open a new shop on Duke Street in Dublin city centre. The company has commenced fit-out works of its new store at no. 24 and is expected to open for business in time for the Christmas trading period. Mulberry’s decision to locate on Duke Street follows a series of high-profile openings on Grafton Street and in its environs. Lego, Russell & Bromley, Skechers, and Mont Blanc have all taken stores in the area while high-end jeweller Paul Sheeran is to occupy the entire ground floor of Hines’ Chatham & King development. The Irish Times, 30th November

O’Connell Street, Dublin 1 The firm redeveloping Clerys has raised concerns that a nearby Starbucks will scare off potential cafés, and a separate prime retail unit will attract lower-quality tenants, unless the two spaces can be merged together for a large restaurant. OCES Property, which is revamping the department-store building on O’Connell Street, has asked Dublin City Council for permission to create a larger space on the ground floor that faces onto Earl Street North. Based on the planning permission granted for the development in 2016, one 700 sq. ft space on the ground floor has to be used for retail, while a separate 1,216 sq. ft unit must be used for food and beverage. A decision on the application is due to be made by the council before the end of the year. The Business Post, 3rd December

Blanchardstown Centre has unveiled international fashion retailer Zara’s newest store in Dublin, with the opening of its newest location at the centre. Comprising 52,000 sq. ft of retail space, the store is its largest location in Ireland. The brand formerly occupied a smaller unit of 14,000 sq. ft at the centre. React News, 2nd December

Co Cork and Co Louth The sales of two of Ireland’s best-known regional shopping centres are coming close to completion for c. €21m and €23m respectively. In the first instance, market sources believe that the Omniplex cinema group is set to acquire Scotch Hall Shopping Centre (guiding €21m) in Drogheda, Co Louth. The second deal meanwhile will see Urban Green Private, the real estate investment firm, secure ownership of Douglas Village Shopping Centre (guiding €21m). The first sale itself comprises 170,000 sq. ft of retail space and a vacant cinema, together with the adjoining multistorey car parks which provide 631 car-parking spaces. The sale also comprises an incomplete block with an expired planning consent. Also included within the centre is a former distillery building. In the case of Douglas Village Shopping Centre, as well as being anchored by Tesco and Marks & Spencer, the 230,000 sq. ft suburban Cork scheme counts TK Maxx, Eurogiant, Bank of Ireland and the recently opened Petstop within its tenant line-up. The centre sits on a 6.1-acre site just 3.5km south of Cork city centre. The Irish Times, 2nd December



Baggot Street Lower, Dublin 2 Leading corporate law firm, BHSM LLP (formerly Baily Homan Smyth McVeigh), has agreed a deal to relocate its offices to 76 Baggot Street Lower, Dublin 2. The firm will occupy the third floor at the landmark building on the basis of a lease assignment from Waystone. BHSM’s new offices are fully fitted out and comprise over 8,000 sq. ft of modern office space that includes a client reception area, several boardrooms and staff facilities. It is understood the passing rent is c. €50 per sq. ft with a remaining lease term of c. nine years. The Irish Times, 30th November



Hotel Outlook, Ireland The number of domestic trips by Irish residents in the summer of 2022 surpassed 2019 levels and Dublin Airport passenger numbers were 94% back to pre-pandemic levels as of October, according to Isobel Horan of JLL. Dublin city hotel market achieved a record 92% occupancy, with an average rate of €234.30 and RevPAR of €215.10 in September. This is the highest monthly RevPAR achieved in Dublin ever. Investment demand grew post-pandemic with c. €400m worth of transactions occurring so far this year and a further c. €150m under negotiation. The total investment volume for this year is likely to exceed 2021 levels. We have also seen the emergence of new transactional structures this year with the appearance of ground-rent sales with the largest hotel ground-rent deal occurring earlier this year. In relation to supply there have been several new openings across Dublin after multiple Covid delays. Where many hoteliers are reporting growth in top-line revenues, increasing energy, payroll, and other costs are affecting profitability. Lastly, a proportion of the Irish hotel stock is currently housing emergency accommodation, which has both positive and negative impacts on the sector. The Irish Times, 5th December

Cashel, South Tipperary Tipperary County Council has received 56 planning objections to the plan to build the Cashel Palace in Cashel in South Tipperary, in two buildings, each one-and-a-half storeys in height. The council’s decision is due on December 19th. The Irish Times, 3rd December

Hatch Street, Dublin 2 A long-standing plan to deliver a five-star boutique hotel at Hatch Hall, the former university residence hall on Hatch Street, Dublin 2, is set to be delayed further following the decision by its owners to sell the property. Just six months after it secured planning permission from An Bord Pleanála to convert and extend the Victorian building into a 60-bedroom hotel, Ashford Castle owners, Red Carnation Hotels, has instructed CBRE to offer it for sale. According to market sources, CBRE is seeking offers of c. €25m – €5m more than Red Carnation paid in 2019 to secure ownership of the property without its current planning permission. The Irish Times, 30th November

Dunboyne, Co Meath Davy Real Estate, has purchased Dunboyne Castle Hotel & Spa in Ireland on behalf of TMR Hotel Collection for a price in excess of €25m. The hotel, which has 145 rooms and a mews building with ten units, was sold off-market after 16 years in private family ownership. TMR Hotel Collection, a portfolio of Irish Hotels owned by investor Thomas Röggla, has appointed Windward Management to operate the facility. React News, 5th December



Crumlin, Dublin 12 11 St Agnes Road in Crumlin, Dublin 12, which is currently in use as a logistics facility by the State’s postal service provider, An Post, is being offered to the market by TWM at a guide price of €4m. As part of the deal, An Post will enter into a licence agreement with the purchaser on a short-term basis at market-level terms while the party in question seeks to secure planning permission to enhance the value of the asset. The property currently comprises a single storey building with a service yard which extends to 8,670 sq. ft. The building sits on a site of 0.44 acres and is zoned Z4 District Centre under the current Dublin City Development Plan. It is proposed to change this designation to Key Urban Village under the terms of the new plan, covering the period from 2022 to 2028. The Irish Times, 30th November

Dundalk, Co Louth Urban Green Private, the real estate investment firm, has secured planning permission from Louth County Council for the development of a single warehouse of 401,375 sq. ft along with parking for 50 heavy goods vehicles (HGVs) at Dundalk North Business Park. Urban Green Private paid €8.9m – or upwards of €330k an acre – to secure ownership of the 27-acre Dundalk site from the McWilliams Group in July of this year. The McWilliams Group is seeking buyers for the 54 acres remaining at Dundalk North Business Park. The lands are being offered to the market by joint agents CBRE and Property Partners Laurence Gunne on a site purchase or build-to-suit basis. The overall scheme has full planning permission for the development of 1.3m sq. ft of industrial and logistics space, along with a petrol filling station. The Irish Times, 30th November

Industrial & Logistics Sector Investors still favour the industrial and logistics asset class due to its strong fundamentals and have money to deploy in this sector, according to Kevin McHugh of Harvey. So, while 2022 will be a strong year for industrial and logistics investments, this will be mainly as a result of its performance in the first half of the year. Conversely, industrial and logistics occupier demand continues to outstrip supply, with the current vacancy rate standing at 1.5%. Industry challenges include energy, wage and raw materials inflation, weaker consumer sentiment, increased borrowing costs and supply-chain disruption. One of the few favourable developments recently was the dramatic fall in the cost of shipping containers which, according to Drewery Supply Chain Advisors, has dropped by 74% since November 2021. Occupiers’ ability to handle these difficulties so far is reflected in the take-up figure for 2022, which is likely to reach 4m sq. ft. Prime rents now range from €11.25 to €11.75 per sq. ft, but these are likely to be significantly higher in 2023, owing to rising build costs, higher investment yields and the supply/demand mismatch. New-build completions for 2022 will likely be close to 2m sq. ft. The Business Post, 3rd December



St Stephens Green, Dublin 2 Irish flexible workspace provider Grafter is to open its latest location at 6-7 St Stephen’s Green in Dublin city centre. The landmark Smyth House, the former flagship premises of UK fashion retailer Topshop, is set to become the company’s first combined office, retail and cafe offering, and will be open to the public as well as members. The property is owned by developer Paddy McKillen jnr and Matt Ryan’s Oakmount, who acquired it earlier this year from Iput for c. €17.25m. The Irish Times, 30th November



Beaumont, Dublin 9 Bartra Capital and Dublin City Council remain locked in “intensive discussions” over when work on more than 1,000 homes at O’Devaney Gardens in Dublin will commence, c. six months after construction was due to begin. The plans to redevelop O’Devaney Gardens have been beset with setbacks since the site was transferred to Bartra in 2019. Following the transfer the firm opted not to proceed with a fully-approved planning permission for 800 homes on the lands, and instead applied to build 1,044 homes in August 2020. That application faced several delays, and when a final decision on it was made by An Bord Pleanála, progress was further delayed when the planning board’s decision was judicially reviewed in November 2021. The legal challenge was filed by Bartra in a bid to overturn a ban on the sale of 524 homes being developed on the site to institutional funds. In June, councillors were told development of the 1,044 homes at O’Devaney Gardens would commence that month because Bartra had been successful in its legal case. But no construction work has commenced and no contractor has been appointed. The Business Post, 3rd December

Development Land Sector A sharp slowdown in development land sales was seen in the year to date with c. €470m worth of land changing hands in the markets which include the Greater Dublin Area, Cork, Limerick and Galway. According to research from Cushman & Wakefield, this represents a decline of c. 72%. This contrasts sharply with house price trends which saw near double digit increases over the last two years. The reduction in the numbers of development land deals can be attributed to a range of factors which are creating uncertainty. These include discrepancies between national and local planning policies as well as increased numbers of judicial reviews taken against approved planning applications. Currently, when analysing zoned lands for developments, pre-construction timelines on site are anywhere between 18 and 42 months, which amasses significant viability issues on projects. The Irish Independent, 1st December

Ailesbury Road, Dublin 4 The Republic of Austria and residents on Ailesbury Road in Dublin 4 are objecting to new “high rise” plans for 688 apartments on former RTÉ campus lands. Last month, Cairn Homes lodged the Large Scale Residential Development (LRD) application with Dublin City Council. It also includes a 192-bedroom hotel, with the apartments comprising 416 build-to-rent units and 272 build-to-sell units. The scheme is to be built across 10 blocks, with the block containing the hotel, reaching to 16 storeys in height. These plans represent Cairn’s second attempt to build on the lands that it purchased for €107.5m in 2017. A previous planning permission granted by An Bord Pleanála was quashed by the High Court on the back of an action taken by three local residents. A decision is due on the application later this month. The Irish Times, 1st December



Investment Outlook, Ireland With interest rates increasing and high-profile lay-offs in the tech sector, some institutional investors have hit the pause button, waiting for greater levels of transparency on pricing before re-entering the market, according to an article by Adrian Trueick of Knight Frank. This has resulted in lower transaction volumes in the final quarter, traditionally the busiest time of the year. Despite this, due to the strong performance in the earlier part of the year, total investment spend for 2022 will exceed €5bn (the third highest level of investment activity on record). Although some investors are sitting on the sidelines, others are taking the opportunity provided by reduced competition and higher returns to secure attractive deals. Although volatile borrowing costs are impacting pricing, with prime yields in both the office and private rented sector (PRS) markets increasing by 25-50 basis points (bps), there are indications that the slowdown in transactional activity may be relatively short-lived, with demand for Irish assets likely to rebound by the second quarter of next year. The Irish Times, 5th December

Investment Outlook, Ireland In a related article, Michele McGarry of Colliers noted that the commercial real estate landscape changed dramatically in the months between the industry’s two main international annual conferences (MIPIM, in France in March, and Expo Real, in Munich in October). This change and the uncertain landscape were in essence a reflection of geopolitical situations: the continuing war in Ukraine, the energy crisis, rapidly rising interest rates, rampant inflation, and climate change concern among other factors.
While it was noted that the market was not yet seeing distress, it may come in certain instances. Some buyers who took out five-year debt terms in 2017 or 2018 – when more than €6bn was invested – may struggle to refinance in the current, more expensive debt market and will have to release stock to the market. On the flip side, across all sectors, the market needs more transactional activity, and this is one way we are going to get it. There is no doubt that buyers want to see price adjustments as they are experiencing in other jurisdictions. Pricing will be impacted, by how much is yet to be seen. The costs of funding will remain an issue in the context of rising interest rates and the fact that we now have just two pillar banks in Ireland is not helpful. This will no doubt impact investment activity, although with high levels of global capital in the market and new funds targeting Ireland, overseas investment should remain robust. The Irish Times, Tuesday 6th December

Blanchardstown, Dublin 15 AstraZeneca’s new pharma manufacturing facility in Dublin is likely to be significantly larger than the company first planned and could now cost up to €600m. The Anglo-Swedish company announced in September last year that it would build a next-generation active pharmaceutical ingredient (API) manufacturing facility at its Alexion campus in Blanchardstown. At the time it said the project, which will be AstraZeneca’s first manufacturing facility in Ireland, would cost over €300m to build. The Business Post, 3rd December

Dublin Microsoft plans to build a large-scale gas power plant as part of a new €900m data centre development in Dublin due to its concerns about the severe constraints on Ireland’s energy grid. The planned investment will bring the total number of data centres operated by the US tech giant in Ireland to 15. Microsoft plans to construct a 170-megawatt (MW) on-site power plant alongside 21 diesel generators in a bid to offset the high-energy demand from the facilities. Microsoft said its data centre facility would consist of two buildings called Dub 14 and Dub 15, which were granted planning permission in May 2021, and will have a total footprint of close to 145,000 sq. ft each. It said the total investment required to build the two data centres and the standby gas plant will be €875m. The Business Post, 3rd December

College Green, Dublin 2 The cost of developing a civic plaza for Dublin’s College Green is set to soar, with Dublin City Council advertising a €10m contract for its design, which does not cover construction costs. The previous plans for the pedestrian and cycle plaza, submitted to An Bord Pleanála in 2017, were given an estimated cost of €10m by the council. However, this figure was to cover both the design and construction of the scheme. The new tender advertised this week by the council will cover only its design, with an indicative value of €10m. The Irish Times, 3rd December


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