No sign of office crash, says Hibernia

By Eamon Quinn

The Dublin office market will escape another boom-to-bust collapse, and demand from international companies for lettings remains strong with room for rent increases, according to the chief executive of property stock market-listed firm Hibernia Reit.

Kevin Nowlan said after the recent boom in construction, there are fewer buildings under construction and that restrictions to the flow of credit to developers will help keep the market on an even keel. Moreover, Dublin will tap the favourable Brexit spill over as technology firms face difficulties in accessing working visas for staff in London.

Hibernia posted a fall in pre-tax profits to just over €107m in the 12 months to the end of March, reflecting the rise in commercial property tax to 6%, a rate Mr Nowlan said, was now at normal European levels.

Kevin Nowlan: Fewer buildings under construction after recent boom. Picture Jason Clarke

After stripping out costs, its net income from rents rose by over 15% to €45.7m from the previous year. And it said it hiked its dividend to 3 cent a share from 2.2 cent. Its shares rose 2.5%.

The Government’s Commissioners of Public Works and Twitter, with rents of €6m and €5.1m respectively, are Hibernia’s two largest tenants.

Concerns have been raised about the rapid rise in property values in Dublin, with Capital Economics in London this week saying it rated the Dublin office market as one of the most “over-valued” cities in Europe.

Mr Nowlan said the office sector “has had a very good 12 months” but cited a strong take up of space in the city centre and fewer buildings coming on stream as evidence the market will come into “equilibrium”, while rents may continue to rise slightly. ECB interest rates will “undoubtedly” start rising and could potentially have an effect of property valuations in the future.

Hibernia is completing two projects in the Dublin docklands this year and the second phase of Cumberland Place is due for completion in the first half of next year.

Further in distance, its building on Harcourt St which is rented out by the Commissioners of Public Works for the Garda is due to be demolished and rebuilt from early 2023.

Hibernia said Mr Nowlan received €2.8m in performance-linked payments in the year; Frank Kenny received €1.8m; William Nowlan got €1.4m; and Frank O’Neil received €6000,000.

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