NEW developments, representing millions of pounds in investment, are set to radically transform Dublin's Middle Abbey Street from a run-down thoroughfare into a busy shopping area.

Over the next three years, a 350-space car-park, a hotel, theatre and a range of new shops will bring commercial life back to the city centre street, according to estate agents.

Long characterised by derelict buildings and service sites, both sides of Middle Abbey Street are to be largely redeveloped. And with proposals to build a stop-off for the new Dublin light rail system - the Luas - at the end of the street, developers are confident that once the building programme has been completed, the street will again become one of busiest thoroughfares in the centre. A £20 million expansion at Arnotts will virtually transform more than half of one side of the street.

The department store group has already started to extend its shop front on Middle Abbey Street and Liffey Street by 80,000 square feet as part of a 410,000-square-foot expansion of its Henry Street premises.

To facilitate the new-style store, Arnotts intends to demolish a range of buildings, including the Adelphi and Light House cinemas, and the Avery Scales building on Middle Abbey Street.

As well as providing further retail space for its own departments and other franchises, the group is also building one of four new car-parks planned for the city centre area. The 350-space car-park is to be built on the Adelphi cinema site.

Meanwhile, across the road buildings that have been derelict for the past 15 years are being primed for a facelift.

In the past 18 months, virtually every building on this side of the street has changed hands in deals estimated to be worth more than £4 million.

Sites such as the disused bonded warehouses and the former Cameo cinema have been sold for well above quoted prices, for conversion to residential and retail use, according to agents.

At the lower end of the street, the former Abbey Mall will soon be transformed into a food court by businessman Joe Layden. Planning permission has been granted for its redevelopment, which will also include space for new retail outlets and residential apartments overhead. That site was purchased for around £750,000.

Further down the street, the old Cameo cinema is being converted into a 21-bedroom hotel, and a new guesthouse is about to open at No. 59.

Although, the street will no longer be known for its cinemas, a new theatre is planned. Developer and publican Cyril O'Byrne, who owns the Mercantile Hotel on Dame Street, intends to develop a round-style theatre complex on a site which is believed to have been purchased for around £300,000.

A refurbished shop is also to let in the area, and a new Borza cafe is to open to cater for the increased residential and passing trade.

Most of these properties formed part of 3.4-acre site between Middle Abbey Street and Bachelor's Walk, acquired by London-based property developers Arlington, over a 10 to 15 year period with a view to building a shopping centre in the area.

A long-running slump in the UK property market forced Arlington to abandon its plans and the site was put on the market.

Having initially drawn little interest, a combination of the availability of tax breaks in the area and the accumulation of such a vast tract of land in the city centre, helped to rekindle interest in Middle Abbey Street, according to Neil Love of Druker Fanning.

Arnotts and the other retailers on Middle Abbey Street will be able to benefit from the significant tax breaks offered in this designated area for urban renewal. In many cases, companies will be able to offset 50 per cent of the capital costs of the redevelopment scheme against their corporation tax bill.

The vast number of redevelopment schemes now planned for Middle Abbey Street will undoubtedly make it a thriving retail area once again, says Aidan O'Hogan of Hamilton Osborne King. The Luas will also add greatly to the street, he believes.

The light rail system, once operational, is expected to bring 2,400 people, per hour into the city centre. A stop is planned at the entrance to the nearby new Jervis Street shopping centre. This, together with a sizeable car-park opening on to Middle Abbey Street, will keep it "pretty busy", says Mr O'Hogan.