AN Bord Pleanala has dramatically overturned Sean Dunne's planning permission to build a massive commercial complex on the AIB Bankcentre site in Ballsbridge.
The planning appeals board said the 41,500sqm office and shopping complex was too big and would "adversely affect" the RDS and residents of neighbouring streets.
The decision marks a major setback for Mr Dunne, who spent €200m on the site in 2006 and had already scaled back his plans so he could get the development through Dublin City Council last summer.
The businessman, who jetted into Dublin Airport on Thursday, declined to comment yesterday but his planning consultant Eamonn Prenter of CSR described the decision as "very disappointing".
"We had a strong approval from Dublin City Council, but this just shows the difficulties you can have negotiating the Irish planning system," he said.
"We think there were a number of positive comments in the [An Bord Pleanala] report and we're going to take those with us and try to rectify the concerns raised."
Asked whether they would definitely make another bid for planning permission on the site, Mr Prenter said that was a "matter for Mr Dunne".
The funding position of the development also remains unclear, given the tough market conditions.
Before this week's setback, Mr Dunne was gearing up to build a complex with six buildings, ranging from five storeys to seven storeys high.
The bulk of the development was to have been used for offices, but there was also a retail element, a café/restaurant and a crèche.
The development drew 12 separate objections, including dispatches from Sandymount and Merrion Residents Association, Aviva Investors (which owns other parts of Bankcentre) and An Taisce.
In its ruling, dated February 7, 2011, An Bord Pleanala said the "scale, massing and height" of the proposed development "would constitute an inappropriate design" for the site.
The board also felt the project would have "an adverse affect on the character and setting of the Royal Dublin Society [RDS]", which stands opposite the site.
The third reason for overturning the planning permission was that the height of the buildings would be "overbearing" and would "seriously injure the amenities of property in the vicinity".