RetailInvestmentThe sale of a Tesco supermarket on Upper Rathmines Road is likely to generate a lot of interest among investors, says Jack Fagan

A top class retail investment with redevelopment potential comes on the market today when Hamilton Osborne King launches a marketing campaign to sell the Tesco supermarket and site at 17/23 Upper Rathmines Road in Rathmines, Dublin 6.

Brian Cooney of the selling agents is quoting over €7.7 million for the high profile investment, a price that would show a net return of 3.5 per cent.

The sale is expected to generate considerable interest given the immense shortage of investment opportunities in Dublin and the indications that many of the investments being looked at by Irish buyers in the UK are overvalued and, in some cases, over rented.

The Tesco supermarket is let to the multiple under a 35-year full repairing and insuring lease from December 1998, at a rent of €300,000 per annum. The lease provides for five-yearly upwards only rent reviews. The next review is due in 2008.

The two-storey modern commercial building extends to 1,774sq m (19,095sq ft) and stands on a site of 0.16 hectares (0.4 of an acre) close to the junction of Lower Rathmines Road and Rathgar Road. The road frontage along Upper Rathmines Road exceeds 52.5 metres. The supermarket operates on the ground floor while the upper floor is used for ancillary storage and staff services.

Potential buyers will obviously look at the potential for redeveloping at least part of the site, which has 77 surface car-parking spaces.

Cooney says it is virtually impossible to find secure retail investments with possible future development potential in prime locations such as this.

Although the supermarket does not match most of Tesco's new outlets in size, no one doubts that the multiple is anxious to stay in Rathmines, given that this is its only store in the highly populated Rathmines, Ranelagh and Rathgar areas.

The only opposition in the area comes from Dunnes Stores in The Swan shopping centre. Both Lidl and Aldi have been scouring the area for a suitable site without success.

Investors or developers pitching for the property could well have Tesco to compete with, given its policy of acquiring strategically placed properties it occupies with development potential.

It has already done this at Roselawn in Castleknock, Wilton in Cork and Golden Island in Athlone.

The investment will be sold by tender on May 25th.