Re: Re: One Berkley court -132m Tower
Dunne paid €379 million for the two sites in 2005, but the fact that he had not actually taken ownership escaped most people, until he pointed it out in a letter to this paper last month.
“Dunne was silent about the precise point at which he took on the responsibility for the very large loans that finance his deal, but presumably the meter is now well and truly running.”
It was included in sale documents and publicly stated that Jurys Doyle would not hand over the properties for two years after the sale.
“it is at the same time very hard at this stage to see how he will make any money out of the project without driving a coach and four though the planning laws.”
He needs an average of 8 storeys on the site to make a sizable profit from what other developers have told me.
“McNamara estimates that his construction, site clearance and finance costs will work out at around €1 billion, or just over €3,300 per square metre for his 300,000sq m mixed use development.”
Not comparing like with like, Irish Glass Bottlers site is a former dump so much more expensive site clearance. He has no idea what interest rate Dunne is paying or how loan is structured, McNamara offered a 17 per cent per annum guaranteed return to investors for some of the finance. Dunne’s finance costs will be much lower. Somebody here suggested a 5.25 per cent bond.
“More specifically, McNamara expects to get €625,000 for a two-bed apartment when his development comes on stream over the next five years. It is a reasonable assumption given current prices, even allowing for the current weakness in the property market. If anything , these prices look a little cheap for Ballsbridge in five years’ time, but using them compensates for the conservative approach to Dunne’s costs.”
The approach to costs wasn’t conservative as previously explained. In addition Dunne is on record is saying that the cheapest apartment will be more than e1 million. Why start using a e625,000 figure. Comparing Ringsend to Ballsbridge in terms of selling price per square metre is ludicrous.
“And if he doesn’t get his towers, then the finances of his project look far less robust. It also calls into question the viability of whatever projects the developers who paid even more than Dunne for the adjoining sites in Ballsbridge have in mind. The €54 million an acre paid by Dunne is dwarfed by the €83 million an acre paid by Ray Grehan for an adjoining site and the €133 million an acre paid by Gerry O’Reilly for his site.”
Ray Grehan paid e171.5 million for his site and expects it to have a completion value of e600 million. Based on standard developer profits of 30 per cent he stands to earn nearly e200 million if ressie values are steady in a few years time.
“Whatever problems Dunne must face, their difficulties will be significantly greater. It is hard to see any of them, Dunne included, making money unless the planning laws are rewritten massively in their favour.”
There is already high rise in the immediate area, most of it dating back more than 30 years when densities and plot ratios were lower. Hardly planning laws being rewritten for him when Lansdowne got planning less than a kilometre away.
It’s armchair economics from McManus TBH.