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Irish Examiner
3 days ago
- Business
- Irish Examiner
€200m expansion planned for 'Mahon 2.0' as premier Munster shopping centre proposes mixed uses and more shops for next 20 years
A MAJOR €200m mixed-use investment in Munster's largest retail complex, Mahon Point in Cork City, is planned as the centre marks its 20th anniversary this year. Proposed for what's being dubbed 'Mahon 2.0', is a significant investment to include 251 apartments, an office block for up to 580 workers, a new civic plaza/market square for gatherings such as the weekly farmers markets, a multi-storey car park, a discount retailer, and eight to 10 additional 'bigger box' shops — including a very large unit to suit a major retailer such as Decathlon, which has been scouting a Cork location. Mahon 2.0 with bigger box retail and civic plaza upgrades for meeting, weekly farmers market etc Planning permission is being sought this week for a phased development — and shift towards more mixed uses — to secure the centre's position over the next two decades by Mahon Point's owner Deka Immobilien, via Henry J Lyons' architects in Dublin and Cork. If approved, it will add around 13,000sq m/140,000sq ft additional 'demand-led' retail space, on top of the existing 350,000sq ft gross footprint at Mahon Point, plus existing 45,000sq ft Omniplex. The centre is separate to Mahon Park Retail Park, which trades nearby. 250 apartments planned, plus 70,000 sq ft of offices Deka acquired the 60-unit shopping centre with cinema and restaurants from Irish developer Owen O'Callaghan back in 2005 and now have €1.5bn in Irish assets. When Mahon 2.0 is fully developed, it will have a value close to €500m in its own right, said Peter O'Meara, director of Savills Cork, who has been involved in tenanting the centre for its first 20 years. 'It's the country's premier centre outside of the M50, and it will continue to be,' he said, adding it is 99% let since the large Debenhams two-storey box vacancy was taken by Frasers/Sports Direct, and if planning is secured, all of the new units proposed 'will be fully let from the start'. Mahon 2.0 plans mixed uses 'Cork is emerging as an international centre of scale, with a projected population growth of 50-60% by 2040. 'With strong demand across residential and retail sectors, this development answers the call for high-quality, integrated spaces that serve both current and future generations,' he said, adding that the proposed mixed use expansion aligns with the national planning framework 2040 and Cork City development plan 2022-2028. Also in the medium/longer term planning horizon is the ambitious cross-city Cork Luas line, due to have its eastern-end terminus right at the edge of Mahon Point if delivered as per plans announced this year. File image from the Feb 2005 opening of Mahon Point, then valued at €230 million, with Brigitte Steinmetz, DEKA Immobilien and Owen O'Callaghan. Currently, Mahon is relatively car dependent with 2,000 parking spaces, the reordering of which will see retail units built on current surface level parking as well as a multi-storey replacement that will add just 125 more parking spaces than are currently provided. Bus Connects has in the recent past already stepped up to 100 bus movements daily in Mahon, with a 24/7 service in the offing. At present, it's reckoned that 20% of Mahon Point's footfall comes from local/public transport and further integrated transport upgrades are anticipated in light rail, bus, cycle supports and hub, underpass etc. In advance of this week's proposed expansion announcement, pre-planning meetings have taken place with City Hall, as well as briefings with the Cork Business Association and Chamber of Commerce, and senior politicians. A first public information event on the proposed Mahon 2.0 development takes place on July 8, at the centre's community room. Blast from the past: then City Manager, Joe Gavin, Taoiseach Bertie Ahern, 2004 Lord Mayor of Cork, Cllr. Colm Burke, Minister Micheal Martin and Owen O'Callaghan of O'Callaghan Properties Ltd. at Mahon Community Centre in 2004 to talk about plans for the Mahon Point development. Notable about the planned Mahon 2.0 is the mixed use, to include almost 70,000sq ft of offices with 40 parking spaces at Mahon Point (adding to c 500,000sq ft of offices nearby at City Gate and City Gate Plaza, National Software Centre, etc) and 250 apartments (with 84 parking spaces), with a tenure type yet to be decided. Mahon Point centre director Justin Young said: 'for the last 20 years, Mahon Point Shopping Centre has been the heart and meeting place for Mahon's community and the wider region. We are excited to present Mahon Point 2.0, a demand-led expansion that enhances Mahon for everyone and looks forward to the next 20 years. 'By placing homes, sustainable transport, and civic amenities at the core of this vision, we hope to create a new chapter in Cork's growth that reflects community values as much as economic ambition.' Deka Immobilien asset manager Hendrik Höppner said: 'we remain deeply committed to Cork and Ireland for the long term. This project reflects our belief in Mahon's potential as a leading urban centre, combining quality of life, economic opportunity, and sustainable planning.' Deka has only sold on one Irish investment in the past 20 years since starting off with Mahon Point in '05, deciding to sell the Tommy Hilfiger store on Dublin's Grafton Street in 2015, notes Savills' director Peter O'Meara.
Hospitality Net
13-06-2025
- Business
- Hospitality Net
Irish Hotel Market – Calm Before the Storm?
It's been a buoyant cycle for hotels in Ireland: long, sustained periods of rising demand, and either constrained supply, or new supply that has been easily absorbed. Transactions have also been strong on the back of these favorable dynamics. For example, the 4-Star Ruby Molly Hotel in Dublin 7 reportedly sold to German group Deka Immobilien as a lease deal this year for €86m (€316k per key). While Deka is known as a leading global real estate fund, the buyer pool for Irish hotel assets in general has been diverse. Capital has come in from various sources – high net worths, family offices, real estate funds and private equity – and closed transactions across both single assets and platforms. Readily available credit (national banks like AIB and Bank of Ireland, but also private credit) has also been a further facilitator of deal activity, albeit at more reasonable loan-to-value ratios than past cycles. The question now is whether a storm is brewing: a storm of new transaction volume highs led by large-scale platform deals, or a storm of trading upheaval, comprising the current period of relative calm. Irish hotels have been delivering sold profit & loss performance for several years running. Why Investors Like Irish Hotels One key driver of deals during this cycle has been Ireland's perceived and real ease of entry (i.e. transparent legal, debt and operating frameworks), particularly for overseas buyers. But it's not just overseas buyers that have been active, domestic groups like Cork-based Cliste Hospitality have also joined the acquisiton wave. With the acquisition of the 69-bedroom Keadeen hotel in Kildare, they expanded to their 15th property under management. Whichever the buyer type, the investment thesis for Irish hotels has been lining up well. The combination of business drivers (Ireland being the gateway to the EU, a tax favorable environment and center for financial and tech sectors) has paried with robust tourism figures. According to the Central Statistics Office, for the full year of 2024, an estimated 6.6m international visitors travelled to Ireland, up 6.7% on 2023. At the same time, the domestic market has proven resilient and further bolstered trading. The results have been impressive, especially in Dublin where hotel occupancy has been above 80% for the last two years. An average daily rate (ADR) of €180 recorded in 2023 was already 27% above 2019 levels. These are staggering figures, even considering the post-Covid recovery. Transaction Volumes and Market Performance From an investor standpoint, the combination of these factors has allowed for investor underwriting to show improving performance, a potential further tightening of yields and strong overall deal returns, at least on paper. Volumes have therefore soared to just shy of €1bn (including development sites and hostel transactions) for 2024; this placed Ireland sixth on an HVS European Hotel Transaction volume comparison chart. Activity like this was last seen in Ireland in 2015, but the volume level has not been reached since the previous peak of €1 billion in 2006, just before the Global Financial Crisis. It is reported by CBRE that transaction volumes could approach another €800m in 2025, with several anticipated platform sales and pending deals on the horizon. A successful acquisition of Dalata Group, reportedly being bid by major players at a potential valuation of €1.7bn, would surely shatter any historic transaction volume records for the country in a single year. Signs of a Market Shift in Ireland We appear to be well progressed in a cycle of positive hotel performance, but off the cycle highs and with increasing clouds on the horizon. In the year to December 2024, national RevPAR still increased by 0.5%. However, the Dublin market RevPAR already peaked in 2023 and fell by 2.2% in 2024. In the short-term, hoteliers have and can trim costs to combat inflationary factors and/or softening RevPAR levels, but there are other looming factors. The Irish Tourist Industry Confederation (ITIC) recently reported that the current geopolitical climate could jeopardize US tourism arrivals to Ireland. This is no surprise, given this market comprises up to 35% of the total Irish tourism spend each year. Even a small negative shift in the value of the US Dollar against the Euro is very detrimental. Those shifts have already occurred, and so the impact is now beginning. One other less studied factor relates to Ireland's structural housing shortage and its impact on hotel performance. To house an influx of refugees to Ireland, the Government has relied on Irish hotels for inventory and signed multi-year government-backed contracts to do so. In more challenging Covid-era times, this benefited hoteliers. Now one must consider the impact that a future void in these contracts would create when they end. In 2024, Fáilte Ireland reported that 28% of all registered tourism bed stock was contracted to the State. Given the cycle, backfilling these extra rooms with tourists, especially in a more challenging operating environment, may not be possible. And then, there is new supply in the Capital; another 3,000 rooms are expected to be delivered in Dublin between 2025 and 2026. Pathways to Prolonged Growth Nevertheless, we sit in a period of relative calm with Irish hotels delivering sold profit & loss performance for several years running, which is driven by good overall fundamentals. Together with minor shifts in cost structure, new tech-driven efficiencies and/or positive policy shifts (e.g. a fresh reduction in VAT) – we've seen precedents for even progressed cycles to be prolonged for years. Critical to this favorable outcome, and allowing the good times to keep rolling, is Dublin Airport. The current passenger cap of 32m, if lifted today, would drive waves of new demand into Irish hotels. Government consultants state that the existing airport infrastructure can handle 36m passengers per annum without additional work (or impact on service). Since the passenger demand is already reportedly there to hit that level, the release of this major incremental influx in arrivals would be a major benefit for Irish hoteliers. In other words, a policy shift could further extend or indeed recoup Irish hotel performance in the short-term. The general expert consensus is that Dublin remains undersupplied in terms of hotel rooms, so that new supply would continue to be absorbed. A Solid Base for Global Expansion Ireland has for a long time proven an excellent home base for hotel companies. The clear operating framework – coupled with access to a pool of talented professionals, entrepreneurial local Management teams and embedded culture of Irish hospitality – has given rise to successful homegrown platforms such as Prem Group and Dalata. With a solid footing in the home market to drive cash flow, these platforms have also proven capable of gaining footholds abroad (for example, in the USA, UK and BeNeLux). In fact, there could be a lot more of these expansion plans to come. In 2024, the sale of a majority stake in the Dean Hotel Group portfolio to Lifestyle Hospitality Capital (LHC) embodied one such strategy, where an investor will take an Irish hotel concept into new markets overseas. LHC has already acquired an asset in Munich to fold into the Dean brand. Several major Irish hotel platforms seem ready for a change of ownership, but it remains to be seen which transactions will materialize. CoStar reported that Apollo Global Management withdrawn the sale of the circa €500M Tifco Irish hotel portfolio in 2024, instead opting to refinance. Dry powder for acquisition and good credit remains available, at least of the time being. But, unlocking major Irish platform transaction at this point of the cycle will take a combination of fresh thinking (e.g. global alliances and re-brandings), a clear plan for overseas expansion, and a prolonged strong performance for the hotels on home soil. View source
