DTZ Sherry FitzGerald's latest quarterly report indicates that Dublin is set to receive 6,100 rooms over the next three years, and planning permission has been secured for 4,200 of these. Beyond that, a further 488 are under construction, 17 percent have submitted plans and the remaining 6 percent are in the pre-planning stage.
Kirsty Rothwell, head of trading assets at DTZ Sherry FitzGerald, noted that Dublin is still facing a shortage of hotel rooms in the city center—a worrisome trend given the rise in visitor numbers.
Last fall, Noel Creedon, head of Cork-based specialist investment firm iNua, said his firm will not buy any properties in the capital despite building up a €20-million fund for hotel acquisitions earlier in the year. But since then, other investors have made major inroads in the city, specifically, the Dalata hotel group, which is looking to build at least another three hotels in Dublin.
That growth is cautious, however. In the spring, Dalata CEO Pat McCann said that Dublin room rates are still lagging behind other European cities, in spite of Dalata reporting RevPAR growth last year. "The difficulty we have in Dublin is, and why you don't have new hotels being developed, is the economic model doesn't work because RevPAR is essentially too low," he said.
Total Irish hotel sales in the first quarter of the year reached €65.8 million across 17 deals—but only two of those were in Dublin.
Broader Irish Market
Including the Dublin properties, up to 7,600 hotel rooms are expected to open across Ireland over the next three years. In all, 13 hotels were under construction in the broader Irish hotel market at the end of March, comprising 658 rooms. Of these, 71 percent—or approximately 464 rooms—cover five Dublin projects. Of the total number of rooms under construction, 48 percent comprise extensions to existing hotels, 45 percent in new hotels while the remaining 7 percent are in hotel redevelopments.
Some of the latest projects to receive approval include two by Oakmount, the development company headed by Paddy McKillen Junior and Matt Ryan. Bord Pleanála granted them permission to develop a five-story boutique hotel in Ranelagh village, Dublin 6 and a seven-story, 93-bedroom hotel, at North Wall Quay, Dublin 1. McKillen and Ryan are also reported to be considering developing a new hotel on Thomas St, Dublin 8.
"Domestic buyers continued to dominate purchasing 69 percent of the value of hotel transactions in the quarter when transaction activity was dominated by small to medium assets, with 88 percent of overall sales accounted for by deals at less than €10 million in value," Rothwell said, adding that the remainder of the year will see about €61 million worth of hotels sales that had been agreed upon at the end of March and due to close in the coming months.
Source: Irish Independent