'No Dublin city bubble' - Hibernia Reit chief
Hibernia Reit CEO Kevin Nowlan has said the company "continues to be optimistic" in relation to the prospects for the Dublin city office market, citing a combination of "relatively constrained" supply and strong interest from domestic and international occupiers, which he believes is set to continue.
Speaking to the Irish Independent following the publication yesterday of Hibernia's preliminary results for the year ended March 31, Mr Nowlan dismissed a recent warning by businessman Denis O'Brien that the capital's office sector was now in "bubble" territory.
Mr O'Brien had expressed his concerns in an interview with reporters at the World Economic Summit in Davos last February, noting how "every time I come back to Dublin, I'm staggered because there is a new crane going up for some new development...".
Mr O'Brien added that while people directly engaged in the property sector disagreed with him, he believed Dublin was now "over-building' offices and that there wouldn't be enough people to put in them.
Asked for his view yesterday, Mr Nowlan drew a distinction between the market for office space in Dublin's Central Business District and the city centre, where Hibernia Reit's own portfolio is concentrated, and the Dublin suburbs.
He said: "We always pull out the city centre [office] delivery from the entire, which includes the Dublin suburbs.
"What you'll see is that next year there's a significant fall off in the delivery of new space in the city centre.
"This year, there's going to be about 1.8m square feet delivered in the city centre, and next year it's going to fall back to about 1m square feet."
On this anticipated 50pc fall in the delivery of new offices in the city centre, Mr Nowlan said many of the longer-term property industry players had now built out their projects, while others who still had land were finding it difficult to secure capital for speculative development.
In its latest set of results, Hibernia Reit reported that the value of its properties had risen from €1.17bn to €1.308bn in the year to the end of March.
Net rental income jumped by 15.1pc in the same period, going from €39.7m in the 2017 financial year to €45.7m this year.
Profit before tax, which includes the surplus from revaluing its properties, fell to €107.1m from €119m in 2017.
Hibernia Reit completed the delivery during the year of its first new office scheme at (1WML) One Windmill Lane in Dublin 2.
It also sold three smaller assets for €35.8m, saying prices were in aggregate 20.6pc ahead of September 2017 carrying values.