What can we infer from the recent revelation that the North Docks office project in Dublin has elicited offers ranging from €60 million to €95 million for a property initially priced at €130 million? This week it was announced that the northern docklands project is being auctioned off by CBRE on behalf of the administrators. Nama and LA-based Oaktree Capital are the current proprietors. The property was previously marketed last August for €155 million, however, no offers were made.
On one side, these offers might be perceived as an indication of fragile investment sentiment, especially as the office vacancy rate exceeds 14 per cent, remote work remains prominent, and there is a considerable influx of new space due on the market this year (with anticipated completion in Dublin expected to be around 250,000sq m by 2024).
Contrastingly, the fact that there have been 10 offers suggests interest from entities with a capacity of over €600 million in institutional capital, eager to invest in the Irish office market – obviously, the price must be right. The reported contenders include the investment firm Sretaw by Eamon Waters, US financier Hines, Irish entrepreneur Pat Crean’s Marlet Property Group, BCP, Orion Capital Managers, Lugus Capital, and Patron Capital. A relatively prestigious roster of bidders at that.
The recent sale of the prestigious asset, 40 Molesworth Street situated in Dublin City Centre provides a glimpse into the current market conditions. In January, Savills launched this seven-year-old prestigious asset on the market for €40 million. Recent reports revealed it sold for €37 million to Deka Immobilien, yielding a 5.16 per cent return for the purchaser.
The positive takeaway for those planning to dispose of an office complex in Dublin in the upcoming period is that there is a potential capital pool exceeding €500 million that might still be available once the North Docks sales process concludes.