This month we invited Carina Galavan & Kevin Kane from Friends First/Aviva to provide us with an Update on their growing Irish Commercial Property Fund.
General Property Outlook;
- Prospects for 2019 remain positive as the Irish economy continues to perform well, unemployment is at its lowest rate in over a decade
- A no deal Brexit could have a significant impact on the Irish Economy, to date however we have seen only a positive impact on the office and industrial sectors – Brexit may emerge as a threat or an opportunity over the course of the year.
- Continuing low interest rates will support a healthy real estate market in 2019
- Rents and capital values are expected to rise in 2019
- Office Sector will continue to perform well in 2019
- Despite a struggling UK Retail Sector, prime retail remains in demand in Dublin and on Grafton Street. As growth in e-commerce continues to impact the sector, there is a focus on increasing food and beverage and leisure elements to benefit the customer experience
- The Industrial Sector continues to remain in high demand
Friends First Property Fund;
- Property returns are mainly being driven by income, and therefore the quality of a fund’s income (yield, WALT, tenant strength etc.) is very important. We discussed the Funds impressive income statistics which are detailed in the Q4 property presentation, these are the strongest in the Irish market for 2018 according to MSCI (IPD).
- Positive estimated rental values (ERVs) of our retail parks and other properties were the largest contributor to values in Q4.
- In Shelbourne Road, Ballsbridge, we recently signed three exceptional new leases, the latest one in Q4, Transaction Network Services (TNS) is a privately held, multinational company in the payments, financial and telecommunications industries. Vacancy levels within the Fund have reduced (3.42% at the end of Q4, down from 4.5% at the end of Q3).
- The construction of the Costa Coffee Pod is now completed in Kilkenny Retail Park, it opened on the 7th December. We expect this strategy will bring increased footfall to the park as was the case for the same Coffee Pod in The Globe in Naas. With new house builds continuing at pace this year, we expect our three retail parks in Naas, Kilkenny and Carlow to continue to benefit and trade and perform well.
- In Royal Hibernian Way, the upgrade of the shopping mall has reached completion, see attached recent photos of the impressive mall. Isabelle’s restaurant which is run by Paddy McKillen’s Press Up Group has been trading since before Christmas and we are in negotiations with two interested parties for the second restaurant unit to provide a complimentary food offering. As the retail works are complete, planning permission has been submitted to redevelop ‘Block C’ (office use) off Duke Lane.
- In Blackrock, the Enterprise House build is really taking shape, building is now at fifth (final) floor level – see attached photo and link to drone footage of the site from January https://youtu.be/Aggjujl_ojk The façade is now being worked on and windows are being installed. Trident House refurbishment works completed in late December. In a huge win for the Fund we are leasing the entire 21,700 square foot to Zurich. Zurich have also fully pre-let the Enterprise House building. Collen Construction commenced works on the exciting shopping centre refurbishment in January 2019 which will continue until the end of November 2019, at the moment heavy works have just commenced with travellator’s being removed from the centre this week. The majority of existing tenants are remaining in occupation post completion of the works, including SuperValu supermarket and other key retailers.
Should you require further information on the Irish Commercial Property Fund or wish to discuss alternatives, we are happy to go through them with you. For more information please contact our office on (01) 4972544.