Business Irish

Friday 15 December 2017

Property group predicts Brexit influx to Dublin office market

Kennedy Wilson Europe, which has €1.05bn of Irish assets, expects to see further relocation announcements regarding Dublin over the course of the year due to Brexit. Photo: Bloomberg
Kennedy Wilson Europe, which has €1.05bn of Irish assets, expects to see further relocation announcements regarding Dublin over the course of the year due to Brexit. Photo: Bloomberg
John Mulligan

John Mulligan

Dublin is poised to see more Brexit-related office relocations during the remainder of the year, according to property investment group Kennedy Wilson Europe (KWE).

Releasing first-half results yesterday, the company, which owns more than €1bn worth of assets in Ireland, said that the office market in the capital has continued to improve.

"The Dublin city centre vacancy rate (in Dublin 2 and 4) remains low at just over 5pc," noted KWE, "with grade A vacancy at 2.0pc, which is putting further pressure on rents."

It added: "The market has benefited from an additional layer of demand from Brexit-related enquiries and we expect to see further Dublin relocation announcements over the rest of the year. "This bodes well for our 'value-add' office portfolio, which has budgeted capex of €7.9m and, with occupancy at 56pc, it has ample room for income growth."

KWE's total portfolio in Ireland was valued at £954.4m (€1.05bn) at the end of June, with its office assets accounting for £553.8m of that.

The company assets include Portmarnock Hotel & Golf Links in Co Dublin, which was valued at £33.8m (€37.5m) at the end of June. KWE has spent just under €10m upgrading the four-star, 135-bedroom property.

"An enhanced marketing and PR plan is being rolled out to take advantage of the completed upgrade with strong early results," it noted. "Our weddings bookings for 2017 are up 88pc compared to all of 2016." It said that net operating income (NOI) at the hotel had soared by 33pc in the year to the end of June.

KWE said it is continuing plans to upgrade Stillorgan Shopping Centre and is on-site working on phase one of a two-year refurbishment programme. An extension to the Tesco store is also under way.

KWE said rent renewals with existing tenants at the shopping centre had resulted in an average rental uplift of 13.2pc compared to passing rents.

KWE has one-third of its total £2.9bn (€3.2bn) in assets located in Ireland. Those assets accounted for 28pc of its £79.7m net operating income in the first half. Bank of Ireland is KWE's second-largest tenant, generating annual rent of £9.5m (€10.5m) for the group, or 6.4pc of the total rent.

Five of KWE's top 10 assets are located in Ireland.

They are the Vantage/Central Park residential and commercial development in south Dublin, which is its second most important asset; the Baggot Plaza office in the capital, at number three; offices at 40/42 Mespil Road at number four; and the Russell Court offices in Dublin, at number five.

Kennedy Wilson Europe is being acquired by its US-based namesake, Kennedy Wilson, in a deal set to be finalised by the end of the year. Kennedy Wilson owns assets including the Shelbourne Hotel in Dublin.

Kennedy Wilson is also developing the huge Capital Dock office site in Dublin in conjunction with Nama and Fairfax Financial.

Irish Independent

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