Castlethorn pays £14 million for Dundrum shopping centre

A property company awaiting planning permission for a major new town centre in Dundrum, Dublin 14, has bought the local shopping centre for almost £14 million. Castlethorn Developments has emerged as the surprise purchasers of the shopping complex, which is now likely to be redeveloped and enlarged. The new owners will earn an initial yield of over 5.5 per cent on their investment. This will rise to around 6.6 per cent once a new round of rent reviews are completed next November.

Dundrum Shopping Centre has been hampered for years by a shortage of car-parking space. Castlethorn is expected to seek planning permission for a multi-storey car-park, which would allow the owners to increase the volume of retail space and perhaps provide offices or other facilities on part of the site. The complex occupies a site of 4.2 acres, with frontage on to the main street in Dundrum. A second frontage and access will be developed on to a new relief road due to be completed at the back of the centre in 2002.

Alan Bradley of Jones Lang Wootton, who is handling the sale of the centre for the Irish Pension Fund Property Unit Trust, said he was not in a position to comment at this stage.

Castlethorn is to commission a feasibility study on the various commercial options open to it. One way or another, the centre is likely to be upgraded and enlarged.

The current rent of £805,148 is expected to rise to around £1 million when reviews are completed. The principal anchors, Tesco and Penneys, account for nearly one-third of total income. Their leases have about nine years to run.

The other main tenants include Ulster Bank, Bewleys, Lifestyle, A-Wear and the EBS. The centre was developed by businessman Charlie Kenny in 1971 and sold to IPFPUT six years later. It has 90,247 sq ft of retail space on two levels, comprising a supermarket, department store and 35 shop units. There is also a three-storey office block with 6,270 sq ft and surface car-parking for 350 cars.

The main town centre in Dundrum will undergo major changes if An Bord Pleanala ratifies the planning permission already granted to Castlethorn for a £190 million complex on the opposite side of the village. RGDATA, representing shopkeepers, has lodged a planning appeal against the decision along with the Eastern Fishery Board, which objects to diverting the River Slang, a tributary of the Dodder.

The scheme will also include a 150-bedroom hotel, a multiplex cinema, a range of leisure and social facilities and a multi-storey car-park for 3,000 cars. Planning permission has already been granted for a 350,000 sq ft shopping centre, roughly the same size as the Jervis Centre in the city. Tesco will be the anchor tenant with 45,000 sq ft. Marks & Spencer is also interested in taking 50,000 sq ft to fulfil a long standing ambition for a major outlet in one of Dublin's most affluent south Dublin suburbs.

The new town centre will have two more anchor units of around 25,000 sq ft each, one a department store. There will also be around 100 unit shops.