Dundrum centre's expansion plans sink due to flood fears
IRELAND'S biggest shopping centre has been told it cannot go ahead with a one-million-square-foot expansion because of flood fears for neighbouring shops and houses.
The owners of Dundrum Town Centre have been refused planning permission to extend the shopping centre, despite getting permission just over five years ago.
Now, the officials at Dún Laoghaire Rathdown have turned down an application from developer Joe O'Reilly, whose Chartered Land built the shopping centre during the Celtic Tiger era.
Dundrum Town Centre is one of Europe's most successful shopping centres and rivals Dublin city centre as a retail hub. With tenants such as Harvey Nichols, Tesco, HMV and Penneys, it draws shoppers from across Ireland.
The centre now belongs to the State and is controlled by the National Asset Management Agency (Nama). The 'Sunday Independent' previously reported that Nama plans to eventually sell the centre for more than €1bn. Nama did not comment yesterday on the planning permission setback and declined to say whether it would appeal the decision to An Bord Pleanála.
The second phase would have involved building on the old Dundrum shopping centre, which was built in the 1970s.
The council blamed "an increased flood risk to surrounding property" for the decision to refuse planning.
The shopping centre itself was flooded in 2011, although this was not a factor in the centre being refused planning permission for the expansion.
The application by Mr O'Reilly's Lenridge development company asked for permission to build a large store, 77 smaller shops, nine restaurants, a 96-room hotel, 40 apartments, a medical centre and a 1,900-space car park. A new library was also planned.
At the moment, the shopping centre has more than 100 shops, 40-plus restaurants, a cinema and theatre, and 3,400 car park spaces. Opened in 2005, it has an annual footfall of 19 million.
Nama took control of Dundrum Town Centre last April, when it bought all loans connected with the centre by buying out debt held by Ulster Bank and KBC Bank Ireland.
The two banks had 16pc and 14pc, respectively, of the debt associated with the shopping centre. Nama is now believed to be selling the centre together with the Pavilions in Swords and the Ilac Centre off Dublin's Henry Street.
Nama has been cagey about the future of the centre since the Sunday Independent first reported last autumn that the centre would be sold. The shopping centre's tenants generate a retail income of €50m a year, meaning its new owners can expect a return of around 5pc a year if it sells for around €1bn.
"There is a huge amount of appetite for retail assets," said Marie Hunt, head of research at CBRE Ireland. "Particularly since so few of these assets have been put up for sale since 2007."
Several sources have previously predicted that Dundrum will attract a new type of investor to Ireland. "Asian sovereign wealth funds are a real possibility. It will attract a new kind of high-quality buyer, one who maybe hasn't looked at Ireland previously," a source said.
South Korean investors were underbidders when the Liffey Valley shopping centre sold last year.
The rise of the dollar also makes the centre much cheaper for US investors, who are buying all sorts of assets in Europe at the moment.