Thursday 13 December 2018

€17m sale of city car park an early test of Donohoe's stamp duty hike

Moira House on Trinity Street comprises a 171-space car park
Moira House on Trinity Street comprises a 171-space car park

Ronald Quinlan Commercial Property Editor

Agents CBRE expect the increase in stamp duty from 2pc to 6pc to have little impact on the €17.3m sale of a Dublin car park - despite the property industry being up in arms at Finance Minister Paschal Donohoe's decision.

Developed in the early 1990s on the site of the former Moira Hotel, the Trinity Street mixed-use scheme, now known as Moira House, comprises the busy 171-space, multi-storey public car park, three retail units at ground level extending to a total floor area of 5,275 sq ft and four self-contained upper floor office suites extending to 2,060 sq ft overall.

While the car park might not attract too much attention from passing pedestrians, drivers venturing in to shop or dine out in Dublin 2 will be aware of its reputation as one of the city's most expensive places to leave a car.

Currently, the rate at Moira House comes in at a not inconsiderable €4 per hour.

Moira House is let under a single, 35-year lease which expires in 2029, at a current annual rent of €920,000.

The car park accounts for €636,000 of that income with the remaining €284,000 being derived from the retail and office elements.

The property's principal tenant operates the public car park itself and has sub-let the various retail and office accommodation to third parties including the renowned Pichet restaurant and Excel Dry Cleaners.

The scheme is located on Trinity Street with frontages to both St Andrew's Lane and Dame Lane.

The car park is well-positioned to cater for the demand thrown up by visitors to Grafton Street and Temple Bar.

The potential of the facility is bolstered further by a number of new hotels currently in the planning process in the area.

Based on the property's €17.3m guide price, its buyer can expect to secure a net initial yield of 4.9pc once standard purchasers' costs, including 6pc stamp duty, are deducted.

Notwithstanding the introduction of the higher stamp duty rate, CBRE executive director Willie Norse expects Moira House to be of interest to traditional investors and specialist car park-related investment funds.

The property will be one of a number of early litmus tests for Mr Donohoe's calculation that the commercial real estate sector will generate sufficient activity to deliver €376m in stamp duty receipts in the next 12 months.

While numerous property industry analysts have argued that international investors in particular will be deterred by the increase in the stamp duty rate, Mr Donohoe remains adamant that it will have little impact.

Addressing the issue at Davy's annual conference last Thursday night, he said: "I take advice in relation to what I think the yield will be. I'm satisfied as to the advice I've received.

"If I look at the contribution I believe it will make to my tax take next year, I believe it will deliver that yield. I also believe it's manageable."

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Irish Independent

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