Hammerson has paid £1bn to take control of Dundrum Town Centre, Ireland’s biggest shopping centre, in a deal the property developer said was attractive amid the uncertainty engulfing the UK after the vote to leave the EU.
This is the first move into the Dublin shopping market for Hammerson, one of the UK’s largest commercial real estate companies.
Hammerson’s decision highlights the turnaround in Ireland’s economy, which has revived strongly since the country was bailed out in 2010 after the financial crisis, becoming Europe’s fastest growing economy last year.
The recovery has been helped by the fall in the value of the euro and Ireland’s continuing appeal as an English-speaking, low-tax entry point for international companies in Europe.
Hammerson said Ireland’s allure was enhanced by comparison with the UK, where the group’s properties include Birmingham’s Bullring and Brent Cross in north-west London. The UK commercial property sector has been thrown into turmoil by the vote to leave the EU, with concerns about falling values of City office blocks and retail parks if the economy shrinks.
David Atkins, Hammerson’s chief executive, said: “Ireland stands out from other European territories for its powerful economic growth and dynamic consumer recovery. Furthermore, against the current backdrop of UK market volatility and political uncertainty, the Irish economy continues to hold a number of competitive advantages as a European hub for business activity in a wide range of sectors.”
Hammerson pointed to high rates of growth for Ireland, whose central bank expects the economy to expand by 5.1% this year and 4.2% in 2017. Many economists expect the UK to dip into recession in the second half of 2016 and the Bank of England is likely to cut interest rates next week to shore up growth.
To support its new acquisitions, Hammerson has opened an office in Dublin that will have about 130 employees. Before the deal, the company owned an interest in a small outlet centre in Kildare, west of Dublin.
Hammerson said: “Thanks to its well-educated workforce, competitive tax regime, robust legal system, English-speaking business environment and ease of access to London and other major international cities, Ireland is expected to continue to hold its competitive advantage in attracting business activity.”
Dundrum Town Centre boats houses 120 shops, 38 restaurants and a 12-screen cinema. Tenants including Harvey Nichols, House of Fraser and Marks & Spencer paid €30m (£26m) in rent last year.
In September, Hammerson and partner Allianz Real Estate – part of Germany’s Allianz insurance group – bought loans secured against retail property from Ireland’s National Asset Management Agency, which oversees troubled assets, for £1.5bn.
They have now taken control of Dundrum Town Centre and the other properties used to secure the loans. Hammerson’s share of the purchase price was £1.01bn.
Hammerson and Allianz will own Dundrum jointly. Hammerson has bought the other properties, including three smaller Dublin shopping centres, from Allianz.
Hammerson shares, which have fallen 15% since the vote to leave the EU, rose 1% to 498p.
