Deep pockets and development potential boosted prices for pubs
STRONG prices were achieved by some of the 12 Dublin pubs which were sold in 2020 thanks partly to the development potential of the properties and the deep pockets of some of the purchasers – including mixed martial arts fighter Conor McGregor – according to agents Bagnall MacMahon Doyle. Meanwhile, property agent CBRE reported that the overall Irish investment market saw more than €3.6bn invested in 2020, with the residential sector accounting for 48pc of investment which put offices in second place at 36pc. John Ryan of Bagnall Doyle MacMahon said that while the number of 2020 pub deals was fewer than the 18 in 2019, the average price increased from €3.25m to €3.8m. The most valuable of them was The Storehouse, Temple Bar which Punch Taverns, backed by Alan McIntosh of Emerald, bought for a near record price of almost €16m. Dunnes Stores bought the Magic Carpet pub and development site in Cornelscourt, Dublin 18, for a price believed to be about €9m.
Pat Crean’s Marlet, is understood to have paid about €8m for Ruin Bar on Tara Street next to the Apollo House site where he is developing a major office scheme. A developer also bought Scruffy Murphy’s just off Mount Street, Dublin 2 for an undisclosed price. Retired MMA fighter Conor McGregor was reported to have paid around €2m for The Black Forge Inn, in Drimnagh, Dublin 12.
Mr Ryan says a number of others went sale agreed before the end of the year including The Queen’s in Dalkey. CBRE is cautiously optimistic for the overall commercial property market in 2021. Managing Director Myles Clarke pointed to the considerable amount of international capital looking to deploy into markets that offer defensive, low-risk characteristics such as Ireland.
“2021 will certainly be a busy year… considering the volume of pent-up demand and the many investment sales campaigns that were put on hold as a result of the pandemic that will now be reignited,” he said.
Mr Clarke also points to the low cost of funds and undersupply of properties especially in the ‘sheds, beds and meds’ sectors including logistics, residential rental, nursing homes and primary healthcare. “Security of cashflow has become important from a pricing perspective, with investors targetting opportunities that offer secure long-income potential,” added his colleague Marie Hunt.
CBRE expects to see more sale-and-leaseback transactions in 2021 as many companies look to release equity and reduce costs. Referring to the retail market, Ms Hunt expects increased vacancy levels to lead to reduced rents but says the magnitude of rental decline is likely to be closer to European falls rather than the sharper British declines.
On the plus side, some retailers will secure stores in locations that they previously wouldn’t have been able to access and these opportunities may attract overseas retailers to Ireland including American Eagle Outfitters, Aerie Lingerie and Six By Nico. She also expects office rents may continue to decline into the first half of 2021, but the main change will be in relation to lease terms.