Saturday 24 March 2018

Zanzibar Hotel to sell for more than twice €5m guide

The Zanzibar Hotel development on Dublin’s Ormond Quay is set to sell for more than €10m
The Zanzibar Hotel development on Dublin’s Ormond Quay is set to sell for more than €10m
Ronald Quinlan

Ronald Quinlan

The sale of the Zanzibar Hotel development on Dublin's Ormond Quay is expected to be agreed shortly for a sum in excess of €10m.

The figure represents a premium of more than 100pc on the €5m price that had been quoted by CBRE when they brought the property to the market last August.

While the figure set to be paid for the former Zanzibar 'superpub' premises by its new owners may seem extraordinary, it isn't surprising given the intensity of the competition for the property, which has full planning permission for the development of an 89-bedroom hotel.

Well over 100 expressions of interest were received from hotel operators and investors based in Ireland, the UK, Europe and China, while more than 80 copies of the hotel's information memorandum were distributed. More than 40 site visits were conducted by individual parties.

In terms of international interest, it is understood Zanzibar attracted the attention of a number of hotel operators, which heretofore had not looked at the Irish market.

Located at numbers 34 to 37 Ormond Quay and overlooking the River Liffey and Ha'penny Bridge, the property's current planning permission provides for the conversion of two protected structures and the provision of an 89-bedroom hotel totalling 7,077 sq m - of which 5,494 sq m is new build and 1,583 sq m is retained protected structures. There are four floors of bedrooms, the majority of which are in the extension to the rear.

Publicans Liam and Des O'Dwyer opened Zanzibar in 1998, just as the Celtic Tiger was taking off. Created with a €3.81m budget, it had a capacity of 1,200 and was part of their Capital Bars group of superpubs, alongside Café en Seine, Major Toms and Bad Bobs. Prior to the crash, Zanzibar had been mooted as part of a plan to develop a 300-bedroom hotel by incorporating it with a site owned by CIE to the rear of its premises.

News of Zanzibar's sale comes just two weeks on from the reported acquisition by a private investor of Lynam's Hotel on O'Connell Street for over €6m. The price achieved for the 42-bedroom hotel, which isn't trading currently, represented an uplift of more than 50pc on the €4m that had been guided by CBRE. The Irish hotel market has seen strong sales activity as demand for accommodation from tourists and business visitors grows in the face of an increasingly limited supply. The shortage of hotels is particularly acute in Dublin, and has been a factor in driving the prices achieved in sales.

Development activity continues to strengthen, however, with agents Cushman & Wakefield noting in their latest report on the hotel sector that the construction of two large hotels was completed in the capital in the third quarter, namely the 198-bedroom Holiday Inn Express on O'Connell Street and an 154-room extension at the Red Cow Complex on the Naas Road. A further 430 rooms were under construction in Dublin at the end of September across six hotels, and almost 200 rooms outside of the capital, Cushman & Wakefield reported.

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