A site with planning permission for 880 apartments and large retail and leisure facilities - sold eight years ago for €15 million - has changed hands again for €165 million, writes Jack Fagan
A consortium led by Treasury Holdings has secured €165 million for the Allegro site in Sandyford, Co Dublin, in the latest deal near the end of a year when commercial property investments within the country look set to hit the €2 billion mark for the first time.
With overall investment returns expected to exceed 20 per cent, 2005 has been marked by a significant return of a confidence that had been missing since 2001 and five deals ranging in size from €80 million to €367 million.
According to figures compiled by investment specialist Lena Clarke of Lisney, the overall turnover has already reached €1.7 billion and, with a number of significant transactions in the pipeline, the magical €2 billion figure should be achieved before the Christmas break. That will be more than twice the turnover in 2004.
The sale of the 7.8-acre Allegro site to Cork-based developer Fleming Construction comes several weeks after Dún Laoghaire Rathdown Co Council granted planning permission for a development which will include 880 apartments and 11,500sq m (123,785sq ft) of shopping facilities, retail warehousing and restaurants. The decision has since been appealed by local residents.
The €165 million selling price is a long way ahead of the £12.5 million (€15.87 million) paid for it when it was sold by private treaty about eight years ago. Treasury Holdings has a 50 per cent stake in the land with the balance owned equally by financier Derek Quinlan and property developer David Arnold.
The consortium got two planning permissions for commercial developments but, when the new Luas service arrived in Sandyford, the owners changed their approach and opted instead for a high density commercial and residential scheme to maximise the value of the site. Ken MacDonald of Hooke & MacDonald, who handled the sale, said yesterday he had "no comment to make at this stage".
Neither the Allegro land sale, the high value Jurys Doyle sites in Ballsbridge (bought by Sean Dunne for almost €380 million), nor the very considerable number of other residential and commercial sites sold this year are taken into account when compiling the 2005 market turnover.
The huge weight of money moving into the commercial market this year stemmed from a much improved supply of properties and pre-funding opportunities, as well as from the continuing availability of cheap mortgages. A buoyant economy made all this possible.
Nowhere was this more obvious than in the retail market which remains the star performer because of thriving consumer sales and an ever-increasing number of overseas traders looking for primary pitches. The much hyped speculation that the new Dundrum Town Centre could undermine Grafton Street proved a bit wide of the mark. However, with a bookie shop, building society, convenience store, chipper and a rash of mobile phone outlets taking up primary positions in Grafton Street at the expense of traditional traders no longer able to pay inflated rents, it must be only a matter of time before Dublin City Council turns its attention to the streets between Grafton Street and South Great George's Street as it seeks to enlarge the prime shopping area.
In the meantime, Dundrum Town Centre is trading quite nicely and is expected to copperfasten its position in south Dublin over the busy Christmas period.
Retailers in both the city and the suburbs will have more to contend with over the next few years, as overseas companies prepare to open cut-price fashion outlet centres in Kildare town, Dundalk and on the A1 side of the Border. With much improved roads coming to many areas, the odds are that we are likely to see even more of these factory outlets popping up around the country.
The overpriced DIY market will also have to take notice of some real competition next year if, as expected, the Swedish giant IKEA finally moves ahead with plans to open a major new store off the M50 in Ballymun.
Dublin office developers are quite accustomed to tough competition and, while a range of legal firms and high-tech companies are now committed to moving into the south docks areas of the city - mainly Grand Canal Harbour and Barrow Street - long completed office blocks in the suburbs continue to push the overall vacancy rate up to 15 per cent.
Happily, the dual strand office market is increasingly appealing to a growing number of multinational companies which are happy to relocate to the suburbs where rents are about half those in the city centre.
The main threat to the thriving commercial property market could come from an external source - the European Central Bank - which some people believe could increase interest rates from a current low of 2 per cent to a high of 3.8-4 per cent, according to Dr Claire Eriksson, head of research at Jones Lang LaSalle.
