20th March (Issue 138)
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.
RESIDENTIAL / LAND
Urbeo Residential Fund: A new housing fund is planning to raise up to €400m to invest in the private rental sector to provide housing to what it views as underserved segments of low and middle income households. Urbeo Residential is a new mixed-tenure Irish housing fund, and will principally focus on Dublin, although it will also look at other Irish cities. The fund, which has a pilot scheme already fully let in Tallaght, has signed a strategic relationship agreement with Glenveagh Living that will see the two organisations collaborate on the sourcing, acquisition and development of residential communities. Urbeo will also act as a potential acquirer of Glenveagh built developments. The first scheme was the 131-unit New Bancroft development, which Urbeo bought in July 2017 for €33m. The investment was backed by the Ireland Strategic Investment Fund (ISIF) and others. ISIF is expected to invest in the planned scaling up of the fund, potentially for up to €100m. Urbeo has appointed Deutsche Bank and Goodbody Stockbrokers to advise on the fund-raising. It said it would target institutional investors seeking long-term stable returns. The Irish Times, 14th March
CSO Residential Property Price Index: The Central Statistics Office have released their latest residential property price index which shows that average prices in January 2018 were up 12.5% compared to January 2017. This is a further increase from the 12.2% uplift in the year to December 2017 and 8.8% in the previous year to January 2017. Dublin residential property prices increased by 12.1% in the year to December 2017 while prices in the rest of the country were up 13% in the same period. The West region showed the greatest price growth, with house prices increasing 17.2% while the South-East region showed the least price growth, with house prices increasing 9.9%. Overall, the national index is 22.3% lower than its highest level in 2007. The Central Statistics Office, 14th March
32.5 Acre Kilkenny Site: Joint agents Cushman & Wakefield and Sherry Fitzgerald McCreery have brought a 32.5 acre site on the edge of Kilkenny city to the market guiding €2.25m (€69k per acre). The land was previously bought by the developers Paddy and Simon Kelly for c. €20m and is now being sold for receivers appointed by Nama. The land is predominantly zoned for a mixed-use development, but it is expected that it will be used primarily to accommodate at least 300 badly needed houses and apartments. The Irish Times, 14 March
Obel Tower Belfast: Agent Lisney has brought a fully-let portfolio of 26 studio apartments in Belfast to the market guiding £2m (€2.25m), just under €77k per apartment. The Obel Tower, the tallest building on the island of Ireland which opened in 2011, is a 27-storey complex comprising 233 luxury apartments and 52,462 sq. ft. of grade A office accommodation. Set out over the first three floors, the studios are fully-let and producing a gross rent of £162k, which equates to a gross yield of 7.2%. At the time of the development’s launch in 2005, studios at the Obel cost £90k, however in the height of the market in 2007, the apartments were fetching £160k. The Irish Independent, 15th March
Social Housing Development Bartra Capital have announced their intention to build 1,200 social housing units to lease to the State with a development value of c€400m. The scheme will comprise mainly apartments and duplexes, in phases of 300 units, valued €100m per phase. Having acquired five dedicated social development sites around Dublin, Bartra intend to have 700 units built by 2020. If approved by the Housing Agency, the 1,200 units would represent nearly half of the social housing units which the government is allowing to be built by the private sector. It is intended that the units would be let on 25 –year leases to local authorities at 95% of market rent. At the end of these terms, the properties are still owned by the developers as there is no lease-to-buy option for the local authorities. Bartra has offered its first social housing site in Dublin, which has planning permission for apartments in Stoneybatter, to Dublin City Council. The Sunday Business Post, 18 March
Cost Rental Apartments Construction is due to commence later this year on the State’s first “cost rental scheme” on a 7 acre site on the Enniskerry Road in Sandyford. The scheme comprising c50 apartments will allow tenants rent these new units for below market rent. Rent will be based on the build cost and cost of maintaining the units. The initial scheme, which has been delayed several times to date, is expected to be made available to private tenants who do not qualify for social housing. The income thresholds have yet to be confirmed. The Sunday Business Post, 18 March
STUDENT ACCOMMODATION
€46m Student Accommodation Scheme Lidl, who intend to develop two student accommodation blocks comprising 364 beds together with a supermarket, offices and retail in Ballymun have engaged CBRE to find potential buyers, seeking offers of c€46m. The scheme, will be located off Ballymun main street c2 km from Dublin City University. The Irish Times, 17 March
OFFICE
Eir HQ, Heuston South Quarter: A wealthy Far Eastern investor is the new owner of the Eir headquarters in Heuston South Quarters after purchasing it for €176m (€778psf) in an off-market sale. The current rent roll on the eight-storey 226k sq. ft. building is €9.3m and will increase to €10.9m in July meaning the investment will show an initial yield of 5.7% when the higher rent comes into effect. Eir’s lease of the building is due to run until 2033, giving the new owner a weighted average lease period of 15 years, with the next five yearly rent review due this July. Commercial agent BNP Paribas Real Estate is believed to have brokered the deal between US owners, Northwood Investment Corporation, and the purchaser. The building was developed by the former company Eircom and was sold in 2006 to Quinlan Private for c. €190m with a sale and leaseback arrangement. Subsequent turmoil in the property market allowed Bank of Scotland to sell the building to Northwood for an undisclosed figure. This sale will be the third largest office investment sale in Ireland in recent years. In June 2016, Middle Eastern investors paid €242m for the PwC headquarters at North Wall Quay and a year earlier Germany-based Union Investments bought the Facebook office at Grand Canal Square for €233m. The Irish Times, 14th March
Claremont Street Project: The Irish Independent understands Amazon has made an offer to developer Sean Reilly to lease the entire 200k sq. ft. of office space currently being developed by the McGarrell Reilly Group as part of the Charlemont Street Regeneration Project in Dublin city centre. Should agreement be reached between the parties, it would pave the way for Amazon to increase its workforce in the capital significantly. The company already employs in excess of 1,400 workers in Dublin. McGarrell Reilly’s development of offices on Charlemont Street forms part of a wider €85m mixed-use scheme it is currently progressing as part of a partnership it entered into with Dublin City Council. Phase one of the project saw the delivery last September of 79 social housing units on the site along with a range of community facilities. The next phase of the project will see 184 private residential units being completed, bringing the total number of new homes to 263. Work was commenced earlier this week on the basement works for the scheme’s first six-storey office block. Construction of the building itself is scheduled to commence this November. Amazon’s search for additional office space in the city follows on from its decision to lease the entire 172k sq. ft. of office space at the Vertium Building on Burlington Road. The US tech giant agreed to pre-let the property from U+I in 2016, prior to the property’s completion by developer Johnny Ronan’s Ronan Group Real Estate (RGRE). The Irish Independent, 15th March
IDA Technology Park, Limerick: Fine Grain Property, an Irish-Singaporean commercial property vehicle, is investing €35m in a new office development at the IDA National Technology Park in Plassey, 6km from Limerick city centre. The new four-storey development will accommodate c. 400 staff and will take 12 months to construct. The scheme is understood to be in the final stages of the planning process, although Fine Grain are open to the idea of tailoring the building for the specific needs of a tenant, if required. The development site was acquired by Fine Grain as part of a €25m investment that also included three adjacent buildings in the technology park. Those are currently occupied by tenants including Cook Medical, clinical research group ICON, and Enet, the sole bidder for the National Broadband Plan. The cost of construction for the new building, which will extend to c. 56,000 sq. ft. is estimated to be €10m. Fine Grain is also developing a new office scheme in Galway, while it spent €8m on an office building at Cork Airport Business Park in December and owns developments at the EastPoint business park in Dublin. The Irish Times, 16th March
RETAIL
Bakers Corner Dun Laoghaire: Agent CBRE is guiding in the region of €4.75m to €5m for the well-known licensed premises Baker’s Corner and adjoining property, The Forge, in Dun Laoghaire, south Dublin. The Forge, produces an annual rental income of c. €150k with the anchor tenant, Paddy Power bookmakers, paying an annual rent of €80k under a 20-year lease. The balance of c. €70k comes from a hairdressing business, fitness studio and three apartments. Baker’s Corner is a highly profitable business that generates considerable income from not only drink sales but also from a food and an off-licence business. The two-storey over-part basement premises extends to c. 12,700 sq. ft. and includes a ground floor lounge with a food catering area, kitchen, public bar and off-licence. The first floor has a self-contained function room, stores and offices. The basement opens into a service yard with delivery facilities. The bar has a designated smoking area outside and parking for around 110 cars. The Forge, a purpose-built investment building, is serviced by two passenger lifts. The entire property extends to c. 1.235 acres and offers alternative uses subject to the necessary planning permission. The Irish Times, 14th March
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