Philip Brainin, director at South Hill Capital, takes a look at why the Dublin retail property market is set for further growth:
Dublin’s property market is rarely out of the news at the moment with a huge focus on office development and the demand for space as a result of Brexit. However, arguably the unsung hero of the sector is the retail market, which is quietly attracting investment from across Europe.
CBRE recently released a report that placed Dublin as the fifth fasted growing prime retail location in the world, after recording a 10.5% year-on-year increase in rents in the first quarter of 2017. From a prime perspective, much of the interest is on Grafton Street, Henry Street and its surrounding roads. According to CBRE: “Demand for quality retail space in Dublin remains robust and the arrival of brands such as Victoria’s Secret and & All Other Stories onto Grafton Street has further underlined the importance of these prime shopping destinations”.
Hammerson has also spoken out this month about the ongoing potential of Dublin’s retail sector. In line with the release of its half year results, the retail property specialist reported a net rental income of €17.4 million from its portfolio in Ireland: Dundrum Town Centre (which it owns in a joint venture with the German insurer Allianz); its share in the Ilac Centre and its share in the Pavilions shopping. Hammerson is also investing heavily in central Dublin, with the redevelopment around O’Connell Street.
Already owning significant chunks of retail property through existing joint ventures, Allianz Real Estate has also just completed the €290 million financing of Liffey Valley Shopping Centre. Allianz is the sole lender on a seven-year fixed rate.
We can expect to see further announcements over the coming months and years with an influx of high earning professionals moving to the city as banks and financial institutions relocate their workforces to Dublin in preparation for Brexit. This will encourage more global retailers to open up stores in our shopping centres and along key retail and leisure streets, which will no doubt push rents further and increase the value of retail property investments.