DUBLIN: Irish banks, still chastened by the property crash, are demanding that developers of hotels in Dublin secure up to 50 per cent equity development before winning debt funding, analysts at Davy have cited Dalata Hotel Group as saying. The comments come even as a shortage of Dublin hotels had the highest occupancy rate last year, at 82.5 per cent, pushing average daily room rates to a record €128, with PricehouseCoopers predicting that a further 15 per cent surge over the next two years even as more developments come onstream. Only five hotels opened in the Irish capital in the decade to the end of last year. “Availability of funding is already an issue for would-be developers, and this challenge will only become greater as further supply comes into the market,” Davy analysts said in a report, published on Tuesday, citing a Dalata presentation during the stockbroking firm’s recent annual site visit to publicly-quoted real-estate firms. “As it stands, some banks are seeking 50 per cent equity investment in new firms.”
Dalata predicts that between 3,000 and 3,500 new rooms will be developed across Dublin by the end of the decade, compared to about 19,000 currently. Real-estate advisory firm CBRE estimates, however, that between 5,700 and 5,900 new rooms will be built, mostly in 2019 at the earliest. Dalata’s more cautious view reflects developers’ funding issues, rising building costs and challenges faced by companies securing planning permission. Meanwhile, the Davy analysts, David Jennings and Colin Sheridan, noted that publicly-quoted Irish firms in the real-estate market were more reticent than overseas players to take on high debt levels. Irish Residential Properties (Ires), the country’s largest private sector landlord that was set up and run by executives at Canadian property investment company Capreit, plans to increase its loan-to-value rate to 45 per cent from 31 per cent.
